BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2014 and 2013 consisted of the following:



	2014		2013
	(in thousands)
Securities sold under agreements to repurchase	$	146,781	$	231,455
Federal funds purchased	—		50,000
Total short-term borrowings	$	146,781	$	281,455

The weighted average interest rate for short-term borrowings was 0.28 percent at both December 31, 2014 and 2013.

Long-Term Borrowings

Long-term borrowings at December 31, 2014 and 2013 consisted of the following:



	2014		2013
	(in thousands)
FHLB advances	$	1,832,166	$	1,982,268
Securities sold under agreements to repurchase	462,500		587,500
Subordinated debt	231,308		221,757
Other	434		781
Total long-term borrowings	$	2,526,408	$	2,792,306

In late December 2014, Valley prepaid $150 million and $125 million of the long-term FHLB advances and securities sold under the agreement to repurchase, respectively. These borrowings had a combined weighted average interest rate of 4.52 percent and contractual maturity dates in November 2015. The debt extinguishment resulted in a loss, consisting of prepayment penalties, totaling approximately $10.1 million for the year ended December 31, 2014.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 3.83 percent and 3.89 percent at December 31, 2014 and 2013, respectively. These FHLB advances are secured by pledges of certain eligible collateral, including but not limited to U.S. government and agency mortgage-backed securities and a blanket assignment of qualifying first lien mortgage loans, consisting of both residential mortgage and commercial real estate loans. The pledged assets to the FHLB also collateralize a $350 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public deposits held at the Bank. Interest expense recorded on FHLB advances totaled $78.2 million, $78.4 million, and $79.5 million for the years ended December 31, 2014, 2013, and 2012, respectively.

The long-term FHLB advances at December 31, 2014 are scheduled for repayment as follows:




Year	Amount
	(in thousands)
2015	$	25,102
2016	182,100
2017	584,969
2018	404,995
2019	—
Thereafter	635,000
Total long-term FHLB advances	$	1,832,166

The long-term advances with scheduled repayments in years after 2016, reported in the table above, include $810 million in advances which are callable for early redemption by the FHLB during 2015 with interest rates ranging from 2.27 percent to 4.09 percent.

The long-term borrowings for securities sold under agreements to repurchase at December 31, 2014 are scheduled for repayment as follows:




Year	Amount
	(in thousands)
2016	$	92,500
2017	220,000
2018	100,000
2019	50,000
Total long-term securities sold under agreements to repurchase	$	462,500

Subordinated Debt. In 2005, the Bank issued $100.0 million of 5.0 percent subordinated notes due July 15, 2015 with no call dates or prepayments allowed. Interest on the subordinated notes is payable semi-annually in arrears at an annual rate of 5.0 percent on January 15 and July 15 of each year. On September 27, 2013, Valley issued $125.0 million of its 5.125 percent subordinated debentures (notes) due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist. Interest on the subordinated debentures is payable semi-annually in arrears on March 27 and September 27 of each year. In conjunction with the issuance, Valley entered into an interest rate swap transaction used to hedge the change in the fair value of the subordinated notes (see Note 14 to the consolidated financial statements for further details on this derivative transaction). The hedged subordinated notes had a net carrying value of $131.3 million and $121.8 million at December 31, 2014 and 2013, respectively. Total interest expense on subordinated notes (including the changes in interest expense related to the interest rate swap) totaled $8.5 million, $5.9 million and $5.0 million at December 31, 2014, 2014, 2013 and 2012, respectively.

Pledged Securities. The fair value of securities pledged to secure public deposits, repurchase agreements, lines of credit, FHLB advances and for other purposes required by law approximated $1.3 billion at both December 31, 2014 and 2013.