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Borrowings

12 Months Ended

Dec. 31, 2020

Note 8: Borrowings

The following table is a summary of borrowings as of December 31, 2020:


		2020			2019
Securities sold under repurchase agreements		$	66,980		$	48,693
Other short-term borrowings ¹			-			48,500
Junior subordinated debentures ²			25,773			57,734
Senior notes			44,375			44,270
Notes payable and other borrowings			23,393			6,673
Total borrowings		$	160,521		$	205,870

¹ Includes short-term FHLBC advances and the outstanding portion of an operating line of credit.

² See Note 9: Junior Subordinated Debentures, below.

The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature within 1 to 90 days from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies, collateralized mortgage obligations, mortgage-backed securities and/or highly-rated issues of State and political subdivisions, and had a carrying amount of $67.0 million and $48.7 million at December 31, 2020 and 2019, respectively. The fair value of the pledged collateral was $94.4 million and $70.7 million at December 31, 2020 and December 31, 2019, respectively. At December 31, 2020, there were no customers with secured balances exceeding 10% of stockholders’ equity.

Total FHLBC advances are generally limited to the lower of 35% of total assets and the amount of acceptable collateral adjusted for applicable funding percentages as determined by the FHLBC. As of December 31, 2020, the Bank had no outstanding short-term FHLBC advances. As of December 31, 2019, the Bank had outstanding short-term FHLBC advances in the amount of $48.5 million with a weighted average interest rate of 1.78%. As of December 31, 2020, FHLBC stock owned by the Bank was valued at $3.7 million, the fair value of securities pledged to the FHLBC was $54.7 million, and the principal balance of loans pledged was $625.8 million. In 2018, the Bank assumed $23.4 million of long-term FHLBC advances with the ABC acquisition. At December 31, 2020, one remaining long-term FHLBC advance, which is included in notes payable and other borrowings, has a total outstanding balance of $6.4 million and is scheduled to mature over the next 5.25 years with an interest rate of 2.83%. At December 31, 2019, these long-term FHLBC advances had a total outstanding balance of $6.7 million and were scheduled to mature over the next 6.25 years with interest rate of 2.83%. Based

on the total amount of securities and loans pledged, the Bank had total borrowing capacity of $459.5 million. Adjusting for the outstanding advances and letters of credit, the Bank had a remaining funding availability of $336.9 million on December 31, 2020.

The Company also has $44.4 million of senior notes outstanding, net of deferred issuance costs, as of December 31, 2020 and $44.3 million as of December 31, 2019. The senior notes were issued in 2016, had an original maturity of ten years, and terms include interest payable semiannually at 5.75% for five years. Beginning December 31, 2021, the senior debt will pay interest at a floating rate, with interest payable quarterly at three month LIBOR plus 385 basis points. The notes are redeemable, in whole or in part, at the option of the Company, beginning with the interest payment date on December 31, 2021, and on any floating rate interest payment date thereafter, at a redemption price equal to 100% of the principal amount of the notes plus accrued and unpaid interest. As of December 31, 2020 and 2019, unamortized debt issuance costs related to the senior notes were $625,000 and $730,000, respectively, and are included as a reduction of the balance of the senior notes on the Consolidated Balance Sheets. These deferred issuance costs will be amortized to interest expense over the ten year term of the notes and included in the Consolidated Statements of Income.

On February 24, 2020, the Company originated a $20.0 million term note, of which $17.0 million is outstanding as of December 31, 2020, with a correspondent bank, the proceeds of which were used in the redemption of the Company’s 7.80% cumulative trust preferred securities issued by Old Second Capital Trust I and related junior subordinated debentures. See the discussion in Note 9 – Junior Subordinated Debentures. The term note was issued for a three year term at one-month LIBOR plus 175 basis points, requires principal and interest payments quarterly, with no prepayment penalties; any remaining balances are due on February 24, 2023. The balance of this note is included within Notes payable and other borrowings on the Consolidated Balance Sheet. The Company also has an undrawn line of credit of $20.0 million with a correspondent bank to be used for short-term funding needs; advances under this line can be outstanding up to 360 days from the date of issuance. This line of credit has not been utilized since early 2019.

Scheduled maturities and weighted average rates of borrowings for the years ended December 31, were as follows:


		2020					2019
					Weighted					Weighted
					Average					Average
		Balance			Rate		Balance			Rate
2020		$	-		-		$	97,193		1.85	%
2021			70,980		0.46	%		-		-
2022			4,000		1.91			-		-
2023			9,000		1.91			-		-
2024			-		-			-		-
2025			-		-			-		-
Thereafter			76,541		5.24			108,677		6.11
Total borrowings		$	160,521		2.86	%	$	205,870		4.10	%