Borrowings

Short-term borrowings

Short-term borrowings mature either overnight or have a remaining fixed maturity not to exceed one year. The following schedule details the Company’s short-term borrowings:



	December 31,
($ in thousands)	2017		2016
Repurchase agreements at an average period-end rate of 0.19% and 0.16% for 2017 and 2016, respectively	$	25,580	$	18,351
FHLB Fixed Rate Credit Advances with interest rates ranging from 1.41% to 1.42%, and 0.51% to 0.74%, for 2017 and 2016, respectively	125,000		225,000
Total short-term borrowings	$	150,580	$	243,351

Repurchase agreements consist primarily of balances in the transaction accounts of commercial customers swept nightly to an overnight investment account. All short-term repurchase agreements are collateralized with investment securities consisting of municipal securities and residential mortgage backed securities. The Company regularly monitors the liquidity and market value of the pledged collateral and may be obligated to provide additional collateral based on the fair value of the underlying securities and/or deposit amounts.

Term fixed rate advances with the FHLB are collateralized with pledged qualifying real estate loans or investment securities subject to a prepayment penalty. Term fixed rate advances outstanding at December 31, 2017, and 2016, had remaining terms less than one year.

At December 31, 2017, and 2016, the Company had a line of credit with the FHLB, set to a percentage of total assets, to borrow additionally up to approximately $490.7 million, and $331.5 million, respectively, with a maximum term up to 20 years. The available borrowing amounts are based on collateral available under a blanket lien arrangement and its holdings of FHLB stock. The Company increases or decreases its holdings of FHLB stock based on the level of FHLB borrowings. The Company had approximately $205.0 million, and $185.0 million, in unsecured federal funds lines available with various financial institutions as of December 31, 2017, and 2016, respectively.

The Company also maintains levels of free securities available for liquidity and additional pledging requirements which totaled $58.2 million, and $37.8 million, as of December 31, 2017, and 2016, respectively.

Additionally, the FRB discount window available borrowing capacity is based on its available collateral which consists of indirect automobile loans pledged under a blanket lien arrangement was $236.5 million, and $248.5 million, as of December 31, 2017, and 2016, respectively. The Company considers the availability under the FRB discount window as a source of short-term funding under unforeseen circumstances and not as a permanent borrowing source.

Additional information on the Company’s short-term borrowings is shown in the table below:



($ in thousands)	2017			2016			2015
Outstanding at December 31,	$	150,580		$	243,351		$	209,730
Maximum month-end outstanding balance	266,439			352,603			303,521
Average daily outstanding balance	134,425			262,674			215,685
Average rate during the year	0.76		%	0.54		%	0.28		%
Average rate at year end	1.21		%	0.58		%	0.37		%

Subordinated debt

Subordinated debt outstanding at the periods indicated is summarized as follows:



	December 31,
($ in thousands)	2017		2016
Subordinated Debt:
Floating rate 30-year capital securities with interest adjusted and paid quarterly at three-month LIBOR plus 3.10%, with a rate of 4.77% and 4.10%	$	15,464	$	15,464
Floating rate 30-year capital securities with interest adjusted and paid quarterly at three-month LIBOR plus 1.89%, with a rate of 3.49% and 2.88%	10,310		10,310
Floating rate 30-year capital securities with interest adjusted and paid quarterly at three-month LIBOR plus 1.40%, with a rate of 2.99% and 2.36%	20,619		20,619
Subordinated notes at an annual fixed rate of 5.875% until May 31, 2025 with interest paid semiannually until June 1, 2025, thereafter, at a floating rate equal to three-month LIBOR plus 3.63% from June 1, 2025 to May 31, 2030, with interest paid quarterly until maturity	75,000		75,000
Principal amount of subordinated debt	121,393		121,393
Less unamortized debt issuance costs	806		939
Subordinated debt, net	$	120,587	$	120,454

Neither the Company or the Bank had any advances or repayments of subordinated debt during 2017. On May 29, 2015, the Bank issued $75.0 million in aggregate principal amount of subordinated notes (the “Notes”). The Notes are due May 31, 2030 and bear a fixed rate of interest of 5.875% per year until May 31, 2025. From June 1, 2025 to the maturity date, the interest rate will be a floating rate equal to the three-month LIBOR plus 363 basis points. Interest on the Notes is payable semiannually beginning December 1, 2015 through June 1, 2025 and payable quarterly from September 1, 2025 through the maturity date. The Notes were priced at 100% of their par value. The Notes are callable by the Bank at their par value in whole or in part on June 1, 2025 or any interest payment date thereafter. The Notes contain certain restrictions on the merger or consolidation of the Company or the sale or transfer of its assets into another entity. In addition, notice shall be provided to the debt holders for certain events, including minimum leverage ratio and other regulatory events. At December 31, 2017, and 2016, the Company was in compliance with all covenants and provisions of the Notes. The Notes qualify as Tier 2 regulatory capital for the Bank and the Company.

All subordinated debt, a total of $121.4 million, matures more than five years after December 31, 2017 with no other long term debt maturing within the next five years. Subordinated debt of $75.0 million, $15.5 million, $10.3 million, and $20.6 million, will mature in 2030, 2033, 2035, and 2037, respectively.

The Company has three business trust subsidiaries that are variable interest entities: Fidelity Southern Statutory Trust I (“FSSTI”), Fidelity Southern Statutory Trust II (“FSSTII”), and Fidelity Southern Statutory Trust III (“FSSTIII”) (collectively, the “Trust Subsidiaries”). The $1.4 million in common securities issued by the Trust Subsidiaries were all purchased by the Company, and are classified by the Company as other assets.

Trust preferred securities totaling $45.0 million are classified as subordinated debt and were sold to third-party investors. In addition, the $1.4 million borrowed from the Trust Subsidiaries to purchase their respective common securities is classified as subordinated debt. The trust preferred securities are redeemable in whole, or in part at a redemption price of 100% by the Trust Subsidiaries. The trust preferred security holders may only terminate the business trusts under defined circumstances such as default, dissolution, or bankruptcy. The trust preferred security holders and other creditors, if any, have no recourse to the Company and may only look to the assets of each Trust Subsidiary to satisfy all debts and obligations.

There was no indebtedness to directors, executive officers, or principal holders of equity securities in excess of 5% of shareholders’ equity at December 31, 2017, or 2016, respectively.