BORROWED FUNDS (Note 10)

Short-Term Borrowings

Short-term borrowings at December 31, 2016 and 2015 consisted of the following:



	2016		2015
	(in thousands)
Securities sold under agreements to repurchase	$	298,960	$	500,991
Federal funds purchased	—		50,000
FHLB advances	782,000		526,000
Total short-term borrowings	$	1,080,960	$	1,076,991

The weighted average interest rate for short-term borrowings was 0.65 percent and 0.69 percent at December 31, 2016 and 2015, respectively.

Long-Term Borrowings

Long-term borrowings at December 31, 2016 and 2015 consisted of the following:



	2016		2015
	(in thousands)
FHLB advances, net ⁽¹⁾	$	1,031,666	$	1,272,591
Securities sold under agreements to repurchase	165,000		307,500
Subordinated debt, net ⁽²⁾	236,731		230,573
Other	509		64
Total long-term borrowings	$	1,433,906	$	1,810,728



(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $18.3 million and $3.6 million at December 31, 2016 and 2015, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $1.9 million and $2.2 million at December 31, 2016 and 2015, respectively.

In August 2016, Valley prepaid $355 million and $50 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings, which had contractual maturity dates in 2018 and a total average interest rate of 3.69 percent, were funded with a new fixed-rate five-year FHLB advance totaling $405.0 million. The transaction was accounted for as a debt modification under U.S. GAAP. As a result, the new advance has an adjusted annual interest rate of 2.51 percent, after amortization of prepayment penalties totaling $20.0 million paid to the FHLB.

In May 2016, Valley prepaid $87 million of FHLB advances assumed in the acquisition of CNL. The prepayment was entirely funded by cash balances that were held as a collateral at the FHLB of Atlanta and resulted in the recognition of a $315 thousand loss on extinguishment of debt for the year ended December 31, 2016.

In December 2015, Valley prepaid $625 million and $220 million of the long-term FHLB advances and securities sold under agreements to repurchase, respectively. These prepaid borrowings had contractual amounts of $795 million and $50 million maturing in 2017 and 2018, respectively, and had a combined weighted average interest rate of 3.72 percent. The debt extinguishment resulted in a loss, consisting of prepayment penalties, totaling approximately $51.1 million for the year ended December 31, 2015.

FHLB Advances. The long-term FHLB advances had a weighted average interest rate of 3.37 percent and 3.96 percent at December 31, 2016 and 2015, 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 $100 million letter of credit issued by the FHLB on Valley’s behalf to secure certain public deposits held at the Bank.

The long-term FHLB advances at December 31, 2016 are scheduled for contractual balance repayments as follows:



Year	Amount
	(in thousands)
2017	$	10,000
2021	840,000
Thereafter	200,000
Total long-term FHLB advances	$	1,050,000

Valley has no FHLB advances maturing in the years 2018 to 2020. The FHLB advances with scheduled repayments in years after 2017, reported in the table above, include $10 million in advances which are callable for early redemption by the FHLB during 2017 with interest rates ranging from 2.27 percent to 3.25 percent.

Long-term borrowings for securities sold under agreements. The long-term borrowings for securities sold under agreements had a weighted average interest rate of 2.41 percent and 3.35 percent at December 31, 2016 and 2015, respectively.

The long-term repos at December 31, 2016 are scheduled for contractual balance repayments as follows:



Year	Amount
	(in thousands)
2017	$	65,000
2018	50,000
Thereafter	50,000
Total long-term securities sold under agreements to repurchase	$	165,000

Subordinated Debt. In June 2015, the Bank issued $100 million of 4.55 percent subordinated debentures (notes) due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist. This subordinated note issuance was intended to replace our $100 million of 5 percent subordinated notes which matured and were repaid in July 2015. Interest on the subordinated notes is payable semi-annually in arrears on June 30 and December 30 of each year.

In September 2013, Valley issued $125 million of its 5.125 percent subordinated 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. In August 2016, the fair value interest rate swap with a notional amount of $125 million was terminated resulting in an adjusted fixed annual interest rate of 3.32 percent on the subordinated notes, after amortization of the derivative valuation adjustment recorded at the termination date (see Note 15). The subordinated notes had a net carrying value of $136.7 million and $130.6 million at December 31, 2016 and 2015, 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 $1.5 billion and $1.4 billion at December 31, 2016 and 2015, respectively.