BORROWINGS

12 Months Ended

Dec. 31, 2019

Federal Home Loan Bank Borrowings

Advances payable to the Federal Home Loan Bank as of December 31 of the years below are summarized as follows:



	2019				2018
			Weighted				Weighted
			Average				Average
	Total		Contractual		Total		Contractual
	Outstanding		Rate		Outstanding		Rate
	(Dollars in thousands)
Stated Maturity
2019	$	—	—	%	$	147,046	2.68	%
2020	104,976		1.79	%	—		—	%
2021	10,042		2.95	%	—		—	%
Subtotal	115,018		1.89	%	147,046		2.68	%
Amortizing advances	730				760
Total Federal Home Loan Bank Advances	$	115,748			$	147,806

To manage the interest rate risk of these advances, the Company may enter into interest rate swap agreements which effectively fix the rate of the borrowing. Inclusive of the impact of these swap arrangements, the weighted average rate of the FHLB borrowings was 1.88% and 2.55% at December 31, 2019 and 2018, respectively.

The Company’s FHLB advances are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the FHLB, residential mortgages, and by certain commercial real estate loans held in the Bank’s portfolio. The carrying value of the loans pledged as collateral for these borrowings totaled $2.5 billion and $1.6 billion at December 31, 2019 and 2018, respectively. The Bank’s unused remaining available borrowing capacity at the FHLB was approximately $1.6 billion and $953.5 million at December 31, 2019 and 2018, respectively, inclusive of a $5.0 million line of credit. At December 31, 2019 and 2018, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB's collateral pledging program.

Short-Term Debt

Excluding FHLB borrowings included in the table above, the Company had no short-term borrowings at December 31, 2019 and December 31, 2018. The Company's short-term borrowings at December 31, 2017 consisted of customer repurchase agreements of $162.7 million which were discontinued and transitioned to a deposit product offering in the fourth quarter of 2018.

In addition, on March 28, 2019, the Company entered into a credit facility for a principal amount of $50.0 million senior unsecured revolving loan credit facility, bearing interest at an interest rate equal to the one-month LIBOR rate plus 1.15%. The Company used the proceeds of these borrowings for funding needs related to the second quarter closing of BHB. During the second quarter of 2019, the Company repaid in full the entire $50.0 million amount of the senior unsecured revolving loan.

The interest expense on short-term borrowings was $104,000, $248,000, and $257,000 for the years ended December 31, 2019, 2018, and 2017, respectively

Long-Term Debt

The following table summarizes long-term debt, net of debt issuances costs, as of the dates indicated:



	December 31
	2019		2018
	(Dollars in thousands)
Long term borrowings, net	$	74,906	$	—
Junior subordinated debentures
Capital Trust V	51,507		51,505
Slades Ferry Trust I	—		10,234
Central Trust I	5,258		5,258
Central Trust II	6,083		6,083
East Main Street Trust	—		3,093
Subordinated debentures	49,601		34,728
Total long-term debt	$	187,355	$	110,901

The interest expense on long-term debt was $8.2 million, $4.2 million, and $3.9 million for the years ended December 31, 2019, 2018, and 2017, respectively.

Long-term borrowings: During the first quarter of 2019 the Company entered into a $75.0 million senior unsecured term loan credit facility. Advances under the term loan facility bear interest at an interest rate equal to one-month LIBOR plus 1.25% (3.19% at December 31, 2019). This term loan facility is due and payable in full on March 28, 2022.

Junior Subordinated Debentures: The junior subordinated debentures are issued to various trust subsidiaries of the Company. These trusts are considered to be variable interest entities for which the Company is not the primary beneficiary, and therefore the accounts of the trusts are not included in the Company’s consolidated financial statements. These trusts were formed for the purpose of issuing trust preferred securities, which were then sold in a private placement offering. The proceeds from the sale of the securities and the issuance of common stock by these trusts were invested in these Junior Subordinated Debentures issued by the Company.

For regulatory purposes, bank holding companies are allowed to include trust preferred securities in Tier 1 capital up to a certain limit. Provisions in the Dodd-Frank Act generally exclude trust preferred securities from Tier 1 capital, however, holding companies with consolidated assets of less than $15 billion, such as the Company, are able to continue to include these instruments in Tier 1 capital, but no such securities issued in the future will count as Tier 1 capital.

Information relating to these trust preferred securities is as follows:



Trust	Description of Capital Securities
Capital Trust V	$50.0 million due in 2037, interest at a variable rate of 3 month LIBOR plus 1.48% (3.37% at December 31, 2019),which, effective on January 17, 2017, has been converted to a fixed rate of 2.84% through the use of an interest rate swap.
Central Trust I	$5.1 million due in 2034, bearing interest at a variable rate of 3 month LIBOR plus 2.44% (4.33% at December 31, 2019). These securities are callable quarterly, until maturity.
Central Trust II	$5.9 million due in 2037, bearing interest at a variable rate of 3 month LIBOR plus 1.65% (3.54% at December 31, 2019). These securities are callable quarterly, until maturity.

All obligations under these trust preferred securities are unconditionally guaranteed by the Company.

Subordinated Debentures: At December 31, 2019 and 2018 there was $50.0 million and $35.0 million, respectively, of outstanding subordinated debentures at the bank holding company. On March 14, 2019 the Company issued $50.0 million in aggregate principal amount in a private placement transaction to institutional accredited investors. The subordinated debentures mature on March 15, 2029. However, with regulatory approval, the Company may redeem the subordinated debentures without penalty at any scheduled payment date on or after March 15, 2024 with 30 days notice. The subordinated debentures carry a fixed rate of interest of 4.75% through March 15, 2024, after which interest converts to a variable rate of the then current three-month LIBOR rate plus 219 basis points. The Company also had outstanding $35.0 million of subordinated debentures that were issued to several investors via private placement on November 17, 2014. The subordinated debentures were to mature on November 15, 2024, however with regulatory approval, the Bank could redeem the subordinated debentures without penalty at any scheduled payment date on or after November 15, 2019 with 30 days' notice. Accordingly, in November 2019 the Company redeemed the $35.0 million of subordinated debentures at the bank holding company with regulatory approval. The interest rate was fixed at 4.75% through November 15, 2019.

The following table sets forth the contractual maturities of long-term debt over the next five years:



	2020		2021		2022		2023		2024		Thereafter		Total
	(Dollars in thousands)
Long term borrowings	$	—	$	—	$	75,000	$	—	$	—	$	—	$	75,000
Junior subordinated debentures
Capital trust V	—		—		—		—		—		51,547		51,547
Central trust I	—		—		—		—		—		5,258		5,258
Central trust II	—		—		—		—		—		6,083		6,083
Subordinated debentures	—		—		—		—		—		50,000		50,000
Total (1)	$	—	$	—	$	75,000	$	—	$	—	$	112,888	$	187,888

(1)

Amounts in this table are presented on a gross basis, and do not include the capitalized issuance costs as presented in the Company's Consolidated Balance Sheet.