Borrowed Funds

6 Months Ended

Jun. 30, 2020

Short-Term Borrowings

Short-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following:



	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances	$	1,235,000	$	940,000
Federal funds purchased	678,900		—
Securities sold under agreements to repurchase	168,980		153,280
Total short-term borrowings	$	2,082,880	$	1,093,280

The contractual weighted average interest rate for short-term borrowings was 0.37 percent and 1.68 percent at June 30, 2020 and December 31, 2019, respectively. Short-term FHLB advances totaling $500 million were hedged with cash flow interest rate swaps during the six months ended June 30, 2020. See Note 12 for additional details.

Long-Term Borrowings

Long-term borrowings at June 30, 2020 and December 31, 2019 consisted of the following:



	June 30, 2020		December 31, 2019
	(in thousands)
FHLB advances, net ⁽¹⁾	$	2,153,052	$	1,480,012
Subordinated debt, net ⁽²⁾	404,455		292,414
Securities sold under agreements to repurchase	350,000		350,000
Other	28		—
Total long-term borrowings	$	2,907,535	$	2,122,426



(1)	FHLB advances are presented net of unamortized prepayment penalties and other purchase accounting adjustments totaling $1.2 million and $2.8 million at June 30, 2020 and December 31, 2019, respectively.
(2)	Subordinated debt is presented net of unamortized debt issuance costs totaling $2.9 million and $1.2 million at June 30, 2020 and December 31, 2019, respectively.

FHLB advances. Long-term FHLB advances had a weighted average interest rate of 2.13 percent and 2.23 percent at June 30, 2020 and December 31, 2019, respectively. 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 long-term FHLB advances at June 30, 2020 are scheduled for contractual balance repayments as follows:



Year	Amount
	(in thousands)
2020	$	30,000
2021	994,769
2022	121,420
2023	428,164
2024	300,000
Thereafter	279,931
Total long-term FHLB advances	$	2,154,284

There are no FHLB advances with scheduled repayments in years 2020 and thereafter, reported in the table above, which are callable for early redemption by the FHLB during 2020.

Securities sold under agreements to repurchase (repos). The long-term repos had a weighted average interest rate of 2.88 percent and 1.94 percent at June 30, 2020 and December 31, 2019, respectively.

The long-term repos at June 30, 2020 are scheduled for contractual balance repayments as follows:



Year	Amount
	(in thousands)
2021	$	300,000
2022	50,000
Total long-term securities sold under agreements to repurchase	$	350,000

Subordinated debt. On June 5, 2020, Valley issued $115.0 million of 5.25 percent Fixed-to-Floating Rate subordinated notes due June 15, 2030. Interest on the subordinated notes during the initial five year term through June 15, 2025 is payable semi-annually on June 15 and December 15. Thereafter, interest is expected to be set based on Three-Month Term SOFR plus 514 basis points and paid quarterly through maturity of the notes. The subordinated notes had a carrying value of $113.1 million at June 30, 2020, net of debt issuance costs.

Valley also had the following subordinated debt outstanding at June 30, 2020:


•	$100 million of 4.55 percent subordinated notes due July 30, 2025 with no call dates or prepayments allowed unless certain conditions exist;


•	$125 million of 5.125 percent subordinated notes due September 27, 2023 with no call dates or prepayments allowed, unless certain conditions exist; and


•	$60 million of 6.25 percent subordinated notes due April 1, 2026 and callable beginning April 1, 2021.

See Note 11 in Valley’s Annual Report on Form 10-K for the year ended December 31, 2019 for further details.