SHORT-TERM DEBT AND LONG-TERM BORROWINGS

12 Months Ended

Sep. 30, 2019

SHORT-TERM DEBT AND LONG-TERM BORROWINGS

SHORT-TERM AND LONG-TERM BORROWINGS

Short-Term Borrowings



September 30,	2019		2018
(Dollars in Thousands)
Overnight federal funds purchased	$	642,000	$	422,000
Repurchase agreements	4,019		3,694
Other short-term borrowings	—		65
Total	$	646,019	$	425,759

The Company had $477.0 million of overnight federal funds purchased from the FHLB and $165.0 million from other financial institutions at September 30, 2019, as compared to $422.0 million at September 30, 2018. At September 30, 2019 and 2018, the Company had no short-term advances from the FHLB.

The Bank has executed blanket pledge agreements whereby the Bank assigns, transfers, and pledges to the FHLB and grants to the FHLB a security interest in real estate and securities collateral. The Bank has the right to use, commingle, and dispose of the collateral it has assigned to the FHLB. Under the agreement, the Bank must maintain “eligible collateral” that has a “lending value” at least equal to the “required collateral amount,” all as defined by the agreement.

At fiscal year-end 2019 and 2018, the Bank pledged securities with fair values of approximately $812.2 million and $1.06 billion, respectively, against specific FHLB advances. In addition, qualifying real estate loans of approximately $928.8 million, and $756.0 million were pledged as collateral at September 30, 2019, and 2018, respectively.

Securities sold under agreements to repurchase totaled approximately $4.0 million and $3.7 million at September 30, 2019, and 2018, respectively.

An analysis of securities sold under agreements to repurchase at September 30, 2019 and 2018 follows:



September 30,	2019			2018
(Dollars in Thousands)
Highest month-end balance	$	4,306		$	3,740
Average balance	3,542			2,557
Weighted average interest rate for the fiscal year	2.67		%	2.05		%
Weighted average interest rate at fiscal year end	2.41		%	2.48		%

The Company pledged securities with fair values of approximately $4.9 million at September 30, 2019, as collateral for securities sold under agreements to repurchase. There were $13.9 million of securities pledged as collateral for securities sold under agreements to repurchase at September 30, 2018.

The Company has a line of credit with another financial institution for $25.0 million as of September 30, 2019. This line of credit has no fee, and, as of September 30, 2019, the Company had not drawn on it.

Long-Term Borrowings



September 30,	2019		2018
(Dollars in Thousands)
Long-term FHLB advances	$	110,000	$	—
Trust preferred securities	13,661		13,661
Subordinated debentures (net of issuance costs)	73,644		73,491
Other long-term borrowings ⁽¹⁾	18,533		1,811
Total	$	215,838	$	88,963

⁽¹⁾Includes $16.6 million of discounted leases and $1.9 million of capital lease obligations at September 30, 2019.

At September 30, 2019, the scheduled maturities of the Company's long-term borrowings were as follows for the fiscal years ending:



September 30,	Long-term FHLB advances		Trust preferred securities		Subordinated debentures		Other long-term borrowings		Total
(Dollars in Thousands)
2020	$	—	$	—	$	—	$	7,301	$	7,301
2021	110,000		—		—		5,074		115,074
2022	—		—		—		2,355		2,355
2023	—		—		—		1,615		1,615
2024	—		—		—		793		793
Thereafter	—		13,661		73,644		1,395		88,700
Total long-term borrowings	$	110,000	$	13,661	$	73,644	$	18,533	$	215,838

Certain trust preferred securities are due to First Midwest Financial Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The securities were issued in 2001 in conjunction with the Trust’s issuance of 10,000 shares of Trust Preferred Securities. The securities bear the same interest rate and terms as the trust preferred securities. The securities are included on the Consolidated Statements of Financial Condition as liabilities.

The Company issued all of the 10,310 authorized shares of trust preferred securities of First Midwest Financial Capital Trust I holding solely securities. Distributions are paid semi-annually. Cumulative cash distributions are calculated at a variable rate of LIBOR plus 3.75% (5.81% at September 30, 2019, and 6.35% at September 30, 2018), not to exceed 12.5%. The Company may, at one or more times, defer interest payments on the capital securities for up to 10 consecutive semi-annual periods, but not beyond July 25, 2031. At the end of any deferral period, all accumulated and unpaid distributions are required to be paid. The capital securities are required to be redeemed on July 25, 2031; however, the Company has a semi-annual option to shorten the maturity date. The redemption price is $1,000 per capital security plus any accrued and unpaid distributions to the date of redemption.

Holders of the capital securities have no voting rights, are unsecured and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s common stock.

Although the securities issued by the Trust are not included as a component of stockholders’ equity, the securities are treated as capital for regulatory purposes, subject to certain limitations.

Through the Crestmark Acquisition, the Company acquired $3.4 million in floating rate capital securities due to Crestmark Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The subordinated debentures bear interest at LIBOR plus 3.00%, have a stated maturity of 30 years and are redeemable by the Company at par, with regulatory approval. The interest rate is reset quarterly at distribution dates in February, May, August, and November. The interest rate as of September 30, 2019 was 5.09%. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.

The Company completed the public offering of $75.0 million of 5.75% fixed-to-floating rate subordinated debentures during fiscal year 2016. These notes are due August 15, 2026. The subordinated debentures were sold at par, resulting in net proceeds of approximately $73.9 million. At September 30, 2019, the Company had $73.6 million in aggregate principal amount in subordinated debentures, net of issuance costs of $1.4 million.