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Long-Term Debt
 12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
Long-Term Debt Long-Term Debt
(In Thousands)
Long-term debt as of December 31, 2021 and 2020 is summarized as follows:
20212020
Federal Home Loan Bank advances$417 $152,167 
Junior subordinated debentures111,373 110,794 
Subordinated notes359,419 212,009 
Total long-term debt$471,209 $474,970 
Federal Home Loan Bank Advances
Long-term advances from the FHLB outstanding at December 31, 2021 mature in 2022 with a fixed rate of 1.86%. Weighted-average interest rates on outstanding advances at December 31, 2021 and 2020 were 1.86% and 0.05%, respectively. These advances are collateralized by a blanket lien on the Bank’s loans. The Company had availability on unused lines of credit with the FHLB of $4,214,274 at December 31, 2021.
In connection with the prepayment of $150,000 and $2,094 in long-term advances from the FHLB during 2021 and 2019, respectively, the Company incurred penalty charges of $6,123 and $54, respectively, which is included in the line item “Debt prepayment penalty” in the Consolidated Statements of Income. The Company did not prepay any outstanding long-term advances from the FHLB during 2020.
Junior Subordinated Debentures
The Company owns the outstanding common securities of business trusts that issued corporation-obligated mandatorily redeemable preferred capital securities to third-party investors. The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated debentures issued by the Company (or by companies that the Company subsequently acquired). The debentures are the trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities. Distributions on the capital securities are payable quarterly at a rate per annum equal to the interest rate being earned by the trusts on the debentures held by the trusts which interest rate reprices quarterly. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. All of the debentures are currently redeemable at par. The Company has entered into an agreement which fully and unconditionally guarantees the capital securities of each trust subject to the terms of the guarantee.
The following table provides details on the debentures as of December 31, 2021:
Principal
Amount		Interest RateYear of
Maturity		Amount
Included in
Tier 1 Capital
PHC Statutory Trust I$20,619 3.07 %2033$20,000 
PHC Statutory Trust II31,959 2.07 203531,000 
Capital Bancorp Capital Trust I12,372 1.72 203512,000 
First M&F Statutory Trust I30,928 1.53 203622,194 
Brand Group Holdings Statutory Trust I10,310 2.27 20359,216 
Brand Group Holdings Statutory Trust II5,155 3.20 20375,051 
Brand Group Holdings Statutory Trust III5,155 3.20 20385,051 
Brand Group Holdings Statutory Trust IV3,093 3.95 20383,270 
During 2003, the Company formed PHC Statutory Trust I to provide funds for the cash portion of the Renasant Bancshares, Inc. acquisition. The interest rate for PHC Statutory Trust I reprices quarterly equal to the three-month LIBOR at the determination date plus 285 basis points. In April 2012, the Company entered into an interest rate swap agreement effective March 17, 2014, pursuant to which the Company receives a variable rate of interest based on the three-month LIBOR plus a spread of 2.85% and pays a fixed rate of interest of 5.49%.
During 2005, the Company formed PHC Statutory Trust II to provide funds for the cash portion of the Heritage Financial Holding Corporation acquisition. The interest rate for PHC Statutory Trust II reprices quarterly equal to the three-month LIBOR at the determination date plus 187 basis points.
In connection with the acquisition of Capital Bancorp, Inc. in 2007, the Company assumed the debentures issued to Capital Bancorp Capital Trust I. The discount associated with the Company’s assumption of the debentures issued to Capital Bancorp Capital Trust I was fully amortized during 2010. The interest rate for Capital Bancorp Capital Trust I reprices quarterly equal to the three-month LIBOR plus 150 basis points. In March 2012, the Company entered into an interest rate swap agreement effective March 31, 2014, whereby the Company receives a variable rate of interest based on the three-month LIBOR plus a spread of 1.50% and pays a fixed rate of interest of 4.42%.
In connection with the acquisition of First M&F Corporation in 2013, the Company assumed the debentures issued to First M&F Statutory Trust I. The discount associated with the Company’s assumption of the debentures issued to First M&F Statutory Trust I had a carrying value of $7,806 at December 31, 2021 and $8,354 at December 31, 2020. The discount is being amortized through March 2036. The interest rate for First M&F Statutory Trust I reprices quarterly equal to the three-month LIBOR plus a spread of 133 basis points. In April 2018, the Company entered into an interest rate swap agreement effective June 15, 2018, whereby the Company pays a fixed rate of 4.180% and receives a variable rate of three-month LIBOR plus a spread of 133 basis points on a quarterly basis and will mature in June 2028.
In connection with the acquisition of Brand Group Holdings, Inc. ("Brand") in 2018, the Company assumed the debentures issued to Brand Group Holdings Statutory Trust I, Brand Group Holdings Statutory Trust II, Brand Group Holdings Statutory Trust III and Brand Group Holdings Statutory Trust IV. The discount associated with the Company’s assumption of the debentures issued to the respective Brand trusts had a carrying value of $412 at December 31, 2021 and $443 at December 31, 2020 and is being amortized through September 2038. The interest rate for each trust acquired from Brand reprices quarterly equal to the three-month LIBOR at the determination date plus 205 basis points for Brand Group Holdings Statutory Trust I, plus 300 basis points for Brand Group Holdings Statutory Trust II and III, and plus 375 basis points for Brand Group Holdings Statutory Trust IV.
The Company has classified $107,782 of the debentures described in the above paragraphs as Tier 1 capital. Federal Reserve guidelines limit the amount of securities that, similar to our junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the amount of debentures we include in Tier 1 capital. Although the Company’s existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital. Further, if as a result of an acquisition of a financial institution the Company exceeds $15,000,000 in assets, or if the Company makes any such acquisition after exceeding $15,000,000 in assets, the Company will lose Tier 1 treatment of our junior subordinated debentures.
For more information about the Company’s derivative financial instruments, see Note 14, “Derivative Instruments.”
Subordinated notes
On August 22, 2016, the Company issued and sold in an underwritten public offering $60,000 aggregate principal amount of its 5.00% Fixed-to-Floating Rate Subordinated Notes due 2026 (the “2026 Notes”) and $40,000 aggregate principal amount of its 5.50% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “5.50% 2031 Notes”), at a public offering price equal to 100% of the aggregate principal amounts of the notes. On September 3, 2020, the Company issued and sold in an underwritten public offering $100,000 aggregate principal amount of its 4.50% Fixed-to-Floating Rate Subordinated Notes due 2035 (the “2035 Notes”), at a public offering price equal to 100% of the aggregate principal amounts of the notes. On November 23, 2021, the Company issued and sold in an underwritten public offering $200,000 in aggregate principal amount of its 3.00% Fixed-to-Floating Rate Subordinated Notes due 2031 (the “3.00% 2031 Notes”), at a public offering price equal to 100% of the aggregate principal amounts of the notes. The 2026 Notes, the 5.50% 2031 Notes, the 2035 Notes and the 3.00% 2031 Notes are referred to collectively as the “Notes”.
The 2026 Notes, 5.50% 2031 Notes, 2035 Notes and 3.00% 2031 Notes mature on September 1, 2026, September 1, 2031, September 15, 2035, and December 1, 2031, respectively. Until but excluding September 1, 2021 and 2026, respectively, the Company paid interest as to the 2026 Notes, and pays interest as to the 5.50% Notes, semi-annually in arrears on each March 1 and September 1 at a fixed annual interest rate equal to 5.00% and 5.50%, respectively. From and including September 1, 2021 and 2026, respectively, to but excluding the maturity date or the date of earlier redemption, the interest rate on the 2026 Notes and the 5.50% 2031 Notes will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR rate plus a spread of 384 basis points and 407.1 basis points, respectively, payable quarterly in arrears on each March 1, June 1, September 1 and December 1. Until but excluding September 15, 2030, the Company pays interest on the 2035 Notes semi-annually in arrears on each March 15 and September 15 at a fixed annual interest rate equal to 4.50%. From and including September 15, 2030, to but excluding the maturity date or the date of earlier redemption, the interest rate on the 2035 Notes will reset quarterly to an annual interest rate equal to the then-current three-month Secured Overnight Finance Rate ("SOFR") plus a spread of 402.5 basis points, payable quarterly in arrears on each March 15, June 15, September 15 and December 15. Until but excluding December 1, 2026, the Company pays interest on the 3.00% 2031 Notes semi-annually in arrears on each June 1 and December 1 at a fixed annual interest rate equal to 3.00%. From and including December 1, 2026, to but excluding the maturity date or the date of earlier redemption, the interest rate on the 3.00% 2031 Notes will reset quarterly to an annual interest rate equal to the then-current benchmark rate (expected to be three-month SOFR plus a spread of 191 basis points, payable quarterly in arrears on each March 1, June 1, September 1, and December 1. Notwithstanding the foregoing, for all of the Notes, in the event that three-month LIBOR or three-month SOFR is less than zero, three-month LIBOR or three-month SOFR, as applicable, shall be deemed to be zero. Beginning with the interest payment date of September 1, 2021 as to the 2026 Notes, September 1, 2026 as to the 5.50% 2031 Notes, September 15, 2030 as to the 2035 Notes, and December 1, 2026 as to the 3.00% 2031 Notes, and on any interest payment date thereafter, the Company may redeem the applicable Notes in whole or in part at a redemption price equal to 100% of the principal amount of the respective Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption.
The Company may also redeem any series of the Notes at any time, at the Company’s option, in whole or in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended. In each case, the redemption price is 100% of the principal amount of the Notes being redeemed plus any accrued and unpaid interest to but excluding the redemption date. There is no sinking fund for the benefit of the Notes, and none of the Notes are convertible or exchangeable.
During October 2021, the Company redeemed, at par, the $15,000 6.50% Fixed-to-Floating Rate Subordinated Notes acquired as part of the Metropolitan BancGroup, Inc. acquisition in 2017 and in December 2021 the Company redeemed, at par, $30,000 of the 2026 Notes. During 2019, the Company redeemed the $30,000 of 8.50% Fixed Rate Subordinated Notes assumed in the Brand acquisition and incurred a debt prepayment penalty of $900, which was accounted for in the purchase accounting fair value adjustment.
The aggregate stated maturities of long-term debt outstanding at December 31, 2021, are summarized as follows:
Federal Home Loan Bank advancesJunior subordinated debenturesSubordinated notesTotal
2022$417 $— $— $417 
2023— — — — 
2024— — — — 
2025— — — — 
2026— — 29,724 29,724 
Thereafter— 111,373 329,695 441,068 
Total$417 $111,373 $359,419 $471,209