Debt |
9 Months Ended |
|---|---|
Sep. 30, 2017 | |
| Debt Disclosure [Abstract] | |
| Debt |
Debt
FHLB Borrowings
The Bank had $110.0 million and $315.0 million in advances (borrowings) from the FHLB as of September 30, 2017 and December 31, 2016, respectively. The FHLB advances were all overnight borrowings at September 30, 2017 and December 31, 2016. For the three months ended September 30, 2017 and 2016, interest expense on FHLB advances was $198,000 and $179,000, respectively, and the weighted-average interest rate was 1.16 percent and 0.47 percent, respectively. For the nine months ended September 30, 2017 and 2016, interest expense on FHLB advances was $714,000 and $673,000, respectively, and the weighted-average interest rate was 0.80 percent and 0.44 percent, respectively.
The Bank maintains a secured credit facility with the FHLB, allowing the Bank to borrow on an overnight and term basis. The Bank had $1.1 billion of loans pledged as collateral with the FHLB, which provides $808.9 million in borrowing capacity, of which $698.9 million remained available at September 30, 2017.
The Bank also has securities with market values of $9.3 million pledged with the FRB, which provides $9.2 million in available borrowing capacity through the Fed Discount Window. There were no outstanding borrowings with the FRB as of September 30, 2017 and December 31, 2016.
Subordinated Debentures
The Company issued Fixed-to-Floating Subordinated Notes (“Notes”) of $100 million on March 21, 2017, with a final maturity on March 30, 2027. The Notes will bear interest at an initial fixed rate of 5.45% per annum, payable semi-monthly on March 30 and September 30 of each year, commencing September 30, 2017. From and including March 30, 2022 and thereafter, the Notes will bear interest at a floating rate equal to the then current three-month LIBOR, as calculated on each applicable date of determination, plus 3.315% payable quarterly. If the then current three-month LIBOR is less than zero, three-month LIBOR will be deemed to be zero. Debt issuance cost was $2.3 million, which is being amortized through the Note's maturity date. At September 30, 2017, the balance of Notes included in the Company's consolidated balance sheet, net of debt issuance cost, was $97.9 million. The amortization of debt issuance cost was $43,000 and $90,000 for the three and nine months ended September 30, 2017, respectively.
The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of the acquisition of CBI with an unpaid principal balance of $26.8 million and an estimated fair value of $18.5 million. The $8.3 million discount is being amortized to interest expense through the debentures' maturity date of March 15, 2036. CBI formed a trust in 2005 and issued $26.0 million of Trust Preferred Securities (“TPS”) at 6.26 percent fixed rate for the first five years and a variable rate at the 3 month LIBOR plus 140 basis points thereafter and invested the proceeds in the Subordinated Debentures. The Company may redeem the Subordinated Debentures at an earlier date if certain conditions are met. The TPS will be subject to mandatory redemption if the Subordinated Debentures are repaid by the Company. Interest is payable quarterly, and 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. At September 30, 2017 and December 31, 2016, the balance of Subordinated Debentures included in the Company's consolidated balance sheets, net of discount of $7.6 million and $7.8 million, was $19.2 million and $19.0 million, respectively. The amortization of discount was $85,000 and $67,000 for the three months ended September 30, 2017, and 2016, respectively, and $243,000 and $185,000 for the nine months ended September 30, 2017, and 2016, respectively.
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