BORROWINGS

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

Federal Home Loan Bank Borrowings

Advances payable to the Federal Home Loan Bank at December 31, 2020 and 2019 were as follows:

	2020				2019
			Weighted				Weighted
			Average				Average
	Total		Contractual		Total		Contractual
	Outstanding		Rate		Outstanding		Rate
	(Dollars in thousands)
Stated Maturity
2020	$	—	—	%	$	104,976	1.79	%
2021	35,042		1.12	%	10,042		2.95	%
Subtotal	35,042		1.12	%	115,018		1.89	%
Amortizing advances	698				730
Total Federal Home Loan Bank Advances	$	35,740			$	115,748

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 1.13% and 1.88% at December 31, 2020 and 2019, 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 $2.1 billion and $2.5 billion at December 31, 2020 and 2019, respectively. The Bank’s unused remaining available borrowing capacity at the FHLB was approximately $1.4 billion and $1.6 billion at December 31, 2020 and 2019, respectively, inclusive of a $5.0 million line of credit. At December 31, 2020 and 2019, 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, 2020 and 2019.

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.

There was no interest expense on short-term borrowings for the year ended December 31, 2020. The interest expense on short-term borrowings was $104,000 and $248,000 for the years ended December 31, 2019, and 2018, respectively. The 2018 expense was primarily attributable to customer repurchase agreements, which were discontinued and transitioned to a deposit product offering in the fourth quarter of 2018.

Long-Term Debt

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

	December 31
	2020		2019
	(Dollars in thousands)
Long term borrowings, net	$	32,773	$	74,906
Junior subordinated debentures
Capital Trust V	51,510		51,507
Central Trust I	5,258		5,258
Central Trust II	6,083		6,083
Subordinated debentures	49,696		49,601
Total long-term debt	$	145,320	$	187,355

The interest expense on long-term debt was $5.4 million, $8.2 million, and $4.2 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Long-term borrowings: During the first quarter of 2019 the Company entered into a senior unsecured term loan credit facility of which $32.8 million and $75.0 million was outstanding at December 31, 2020 and 2019, respectively. Advances under the term loan facility bear interest at an interest rate equal to one-month LIBOR plus 1.25% (1.40% at December 31, 2020). 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% (1.70% at December 31, 2020),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% (2.66% at December 31, 2020). 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% (1.87% at December 31, 2020). 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, 2020 and 2019 the Company held $50.0 million of outstanding subordinated debentures at the bank holding company. On March 14, 2019 the Company issued subordinated debentures with an aggregate principal amount of $50.0 million 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, or equivalent alternate rate.

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

	2021		2022		2023		2024		2025		Thereafter		Total
	(Dollars in thousands)
Long term borrowings	$	18,750	$	14,023	$	—	$	—	$	—	$	—	$	32,773
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)	$	18,750	$	14,023	$	—	$	—	$	—	$	112,888	$	145,661

(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.