(7) FUNDS BORROWED

The outstanding balances of funds borrowed were as follows:


	Payments Due for the Fiscal Year Ending September 30,												Bank Holding Company Accounting September 30,		Investment Company Accounting December 31,		Interest
(Dollars in thousands)	2019		2020		2021		2022		2023		Thereafter		2018		2017		Rate⁽¹⁾
Deposits	$	417,151	$	213,514	$	135,218	$	140,394	$	40,698	$	—	$	946,975	$	—		2.04	%
DZ loan		96,058		—		—		—		—		—		96,058		99,984		3.86	%
SBA debentures and borrowings		3,621		25,877		8,500		—		5,000		37,500		80,498		79,564		3.40	%
Notes payable to banks		60,039		—		7,265		—		—		—		67,304		81,450		4.47	%
Retail notes		—		—		33,625		—		—		—		33,625		33,625		9.00	%
Preferred securities		—		—		—		—		—		33,000		33,000		33,000		4.45	%
Other borrowings		500		7,114		—		—		—		—		7,614		—		2.00	%

Total	$	577,369	$	246,505	$	184,608	$	140,394	$	45,698	$	70,500	$	1,265,074	$	327,623		2.64	%

(1)	Weighted average contractual rate as of September 30, 2018.

(A) DEPOSITS

Deposits are raised through the use of investment brokerage firms who package deposits qualifying for FDIC insurance into pools that are sold to the Bank. The rates paid on the deposits are highly competitive with market rates paid by other financial institutions. Additionally, a brokerage fee is paid, depending on the maturity of the deposits, which averages less than 0.15%. Interest on the deposits is accrued daily and paid monthly, quarterly, semiannually, or at maturity. All time deposits are in denominations of less than $250,000 and have been originated through certificates of deposit broker relationships. The table presents time deposits of $100,000 or more by their maturity:


(Dollars in thousands)	September 30, 2018
Three months or less	$	126,721
Over three months through six months		72,280
Over six months through one year		218,150
Over one year		529,824

Total deposits	$	946,975

(B) DZ LOAN

In December 2008, Trust III entered into a loan agreement with DZ Bank, to provide up to $200,000,000 of financing through a commercial paper conduit to acquire medallion loans from MFC (DZ loan), which was extended in December 2013 until December 2016, and which has been further extended several times and currently terminates in December 2018. The line was reduced to $150,000,000, and was further reduced in stages to $125,000,000 on July 1, 2016, and remains as an amortizing facility, with $96,058,000 outstanding at September 30, 2018. During 2017 and 2018, the DZ loan was amended several times, for the most part to improve Trust III’s flexibility under the credit facility. Also, see Note 7(H) below.

Borrowings under Trust III’s DZ loan are collateralized by Trust III’s assets. MFC is the servicer of the loans owned by Trust III. The DZ loan includes a borrowing base covenant and rapid amortization in certain circumstances. In addition, if certain financial tests are not met, MFC can be replaced as the servicer. The interest rate with the 2013 extension is a pooled short-term commercial paper rate which approximates LIBOR (30 day LIBOR was 2.26% at September 30, 2018) plus 1.65%.

(C) SBA DEBENTURES AND BORROWINGS

Over the years, the SBA has approved commitments for MCI and FSVC, typically for a four and half year term and a 1% fee, which was paid. During 2017, the SBA restructured FSVC’s debentures with the SBA totaling $33,485,000 in principal into a new loan by the SBA to FSVC in the principal amount of $34,024,756 (the SBA Loan). In connection with the SBA Loan, FSVC executed a Note (the SBA Note), with an effective date of March 1, 2017, in favor of SBA, in the principal amount of $34,024,756. The SBA Loan bears interest at a rate of 3.25% per annum, required a minimum of $5,000,000 of principal and interest to be paid on or before February 1, 2018 (which was paid), and requires a minimum of $10,000,000 of principal and interest to be paid on or before February 1, 2019, and all remaining unpaid principal and interest on or before February 1, 2020, the final maturity date. The SBA Loan agreement contains covenants and events of defaults, including, without limitation, payment defaults, breaches of representations and warranties and covenants defaults. As of September 30, 2018, $172,485,000 of commitments had been fully utilized, there were $3,000,000 of commitments available, and $80,498,000 was outstanding, including $29,498,000 under the SBA Note.

(D) NOTES PAYABLE TO BANKS

The Company and its subsidiaries have entered into note agreements with a variety of local and regional banking institutions over the years, as well as other non-bank lenders. The notes are typically secured by various assets of the underlying borrower.

The table below summarizes the key attributes of the Company’s various borrowing arrangements with these lenders as of September 30, 2018.

(Dollars in thousands)

Borrower

# of Lenders
/ Notes

Note
Dates

Maturity
Dates

Type

Note
Amounts

Balance
Outstanding at
September 30,
2018

Monthly Payment

Average
Interest
Rate at
September 30,
2018

Interest
Rate
Index ⁽¹⁾

The Company

6/6

4/11 - 8/14

11/18 - 7/19

Term
loans and
demand
notes
secured by
pledged
loans⁽²⁾

47,621

Interest⁽³⁾

4.87

Various

⁽²⁾

Medallion Chicago

3/28

11/11 - 12/11

6/19 - 9/21

Term
loans
secured by
owned
Chicago
medallions⁽⁴⁾

25,708

19,683

$171 principal &
interest

3.50

N/A

73,329

67,304

(1)	At September 30, 2018, 30 day LIBOR was 2.26%, 360 day LIBOR was 2.92%, and the prime rate was 5.25%.

(2)	One note has an interest rate of Prime, one note has an interest rate of Prime plus 0.50%, one note has a fixed interest rate of 4.50%, one note has an interest rate of LIBOR plus 3.50%, and the other interest rates on these borrowings are LIBOR plus 2%.

(3)	Various agreements call for remittance of all principal received on pledged loans subject to minimum monthly payments ranging from $0 to $75.

(4)	Guaranteed by the Company.

(E) RETAIL NOTES

In April 2016, the Company issued a total of $33,625,000 aggregate principal amount of 9.00% unsecured notes due 2021, with interest payable quarterly in arrears. The Company used the net proceeds from the offering of approximately $31,786,000 to make loans and other investments in portfolio companies and for general corporate purposes, including repaying borrowings under its DZ loan in the ordinary course of business.

(F) PREFERRED SECURITIES

In June 2007, the Company issued and sold $36,083,000 aggregate principal amount of unsecured junior subordinated notes to Fin Trust which, in turn, sold $35,000,000 of preferred securities to Merrill Lynch International and issued 1,083 shares of common stock to the Company. The notes bear a variable rate of interest of 90 day LIBOR (2.40% at September 30, 2018) plus 2.13%. The notes mature in September 2037 and are prepayable at par. Interest is payable quarterly in arrears. The terms of the preferred securities and the notes are substantially identical. In December 2007, $2,000,000 of the preferred securities were repurchased from a third party investor. At September 30, 2018, $33,000,000 was outstanding on the preferred securities.

(G) OTHER BORROWINGS

In November and December 2017, RPAC amended the terms of various promissory notes with affiliate Richard Petty (refer to Note 13 for more details). At December 31, 2017, the total outstanding on these notes was $7,007,894 at a 2.00% annual interest rate compounded monthly and due March 31, 2020. As of September 30, 2018, $7,114,000 was outstanding on these notes. Additionally, RPAC has a short term promissory note to Travis Burt, an unrelated party, for $500,000 due on December 31, 2018.

(H) COVENANT COMPLIANCE

Certain of the Company’s debt agreements contain restrictions that require the Company and its subsidiaries to maintain certain financial ratios, including debt to equity and minimum net worth. The Company was not in compliance with a financial covenant in the DZ loan agreement as of September 30, 2018. The Company is currently in the process of working with DZ Bank to amend such covenant in the DZ loan agreement. Historically the Company has received approvals for similar amendments. While there can be no assurance that it will be received, the Company has received preliminary indication from DZ Bank that it will obtain approval for such an amendment. Except as previously set forth, the Company is in compliance with such restrictions as of September 30, 2018.