NOTE 8: Long-term Funding

Long-term funding (funding with original contractual maturities greater than one year) was as follows.


	June 30,		December 31,
	2011		2010
	($ in Thousands)
Federal Home Loan Bank (“FHLB”) advances	$	800,502	$	1,000,528
Senior notes, net		298,663		—
Subordinated debt, net		167,531		195,436
Junior subordinated debentures, net		215,738		215,848
Other borrowed funds		1,740		1,793

Total long-term funding	$	1,484,174	$	1,413,605

FHLB advances: At June 30, 2011, long-term advances from the FHLB had maturities through 2020 and had weighted-average interest rates of 1.58%, compared to 1.66% at December 31, 2010. These advances all had fixed contractual rates at both June 30, 2011, and December 31, 2010.

Senior notes: In March 2011, the Corporation issued $300 million of senior notes at a discount. The senior notes mature on March 28, 2016 and have a fixed coupon interest rate of 5.125%.

Subordinated debt: In September 2008, the Corporation issued $26 million of 10-year subordinated debt with a 5-year no-call provision, and in August 2001, the Corporation issued $200 million of 10-year subordinated debt. The subordinated notes were each issued at a discount, and the September 2008 debt has a fixed coupon interest rate of 9.25%, while the August 2001 debt has a fixed coupon interest rate of 6.75%. The Corporation retired $30 million of the August 2001 debt in the third quarter of 2010 and paid an early termination penalty of $0.7 million (included in other noninterest expense on the consolidated statements of income). During the first quarter of 2011, the Corporation retired another $28 million of the August 2001 debt and paid an early termination penalty of $0.6 million (included in the other noninterest expense on the consolidated statements of income). Subordinated debt qualifies under the risk-based capital guidelines as Tier 2 supplementary capital for regulatory purposes, and is discounted in accordance with regulations when the debt has five years or less remaining to maturity. The remaining outstanding balance of $142 million on the August 2001 notes are due and payable on August 15, 2011 and, in accordance with regulatory guidelines, no longer qualify as Tier 2 capital.

Junior subordinated debentures: The Corporation has $180.4 million of junior subordinated debentures (“ASBC Debentures”), which carry a fixed rate of 7.625% and mature on June 15, 2032. Beginning May 30, 2007, the Corporation has had the right to redeem the ASBC Debentures, at par, and none were redeemed in 2010 or during the first half 2011. The carrying value of the ASBC Debentures was $179.7 million at both June 30, 2011 and December 31, 2010. With its October 2005 business combination, the Corporation acquired variable rate junior subordinated debentures at a premium (the “SFSC Debentures”), from two equal issuances (contractually $30.9 million on a combined basis), of which one pays a variable rate adjusted quarterly based on the 90-day LIBOR plus 2.80% (or 3.07% at June 30, 2011) and matures April 23, 2034, and the other which pays a variable rate adjusted quarterly based on the 90-day LIBOR plus 3.45% (or 3.71% at June 30, 2011) and matures November 7, 2032. The Corporation has the right to redeem the SFSC Debentures, at par, on a quarterly basis and none were redeemed in 2010 or during the first half of 2011. The carrying value of the SFSC Debentures was $36.1 million at June 30, 2011 and $36.2 million at December 31, 2010.