LONG-TERM DEBT

12 Months Ended

Dec. 31, 2019

Long-term Debt, Unclassified [Abstract]

12. LONG-TERM DEBT

Long-term debt, which is based on original maturity, consisted of FHLB advances and subordinated debentures totaling $101.5 million and $122.2 million at December 31, 2019 and 2018, respectively.



	December 31,
	2019		2018
	(Dollars in thousands)
FHLB advances	$	50,000	$	50,000
Subordinated debentures	51,547		72,166
Total	$	101,547	$	122,166

At December 31, 2019, future principal payments on long-term debt based on redemption date or final maturity are as follows (dollars in thousands):



Year Ending December 31:
2020	$	25,000
2021	25,000
2022	—
2023	—
2024	—
Thereafter	51,547
Total	$	101,547

FHLB Advances

FHLB long-term advances outstanding totaled $50.0 million as of December 31, 2019 and $50.0 million as of December 31, 2018. At December 31, 2019, our bank had FHLB advances available of approximately $1.57 billion, which was secured by certain real estate loans with a carrying value of $2.48 billion in accordance with the collateral provisions of the Advances, Pledge and Security Agreement with the FHLB. Interest expense on FHLB long-term advances was $1.6 million and $0.2 million in 2019 and 2018, respectively. There was no interest expense on long-term FHLB advances in 2017.

Subordinated Debentures

As of December 31, 2019 and December 31, 2018, the Company had the following junior subordinated debentures outstanding:



(dollars in thousands)	December 31, 2019
Name of Trust	Amount of Subordinated Debentures		Interest Rate
Trust IV	$	30,928	Three month LIBOR + 2.45%
Trust V	20,619		Three month LIBOR + 1.87%
Total	$	51,547

	December 31, 2018
Name of Trust	Amount of Subordinated Debentures		Interest Rate
Trust II	$	20,619	Three month LIBOR + 2.85%
Trust IV	30,928		Three month LIBOR + 2.45%
Trust V	20,619		Three month LIBOR + 1.87%
Total	$	72,166

In October 2003, we created two wholly-owned statutory trusts, CPB Capital Trust II, a Delaware statutory trust ("Trust II") and CPB Statutory Trust III, a Delaware statutory trust ("Trust III"). Trust II issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month London Interbank Offered Rate ("LIBOR") plus 2.85% and maturing on October 7, 2033. The principal assets of Trust II are $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust II trust preferred securities. Trust II issued $0.6 million of common securities to the Company.

On November 13, 2018, the Company submitted a notice to the trustee and security holder to redeem, in whole and at par, the $20.0 million of trust preferred securities issued by Trust II. The trust preferred securities were redeemed, along with the $0.6 million in common securities issued by Trust II and held by the Company, as a result of the concurrent redemption of 100% of the Company's outstanding floating rate junior subordinated debentures held by Trust II, which underlay the trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture and occurred on January 7, 2019. The redemption price for the floating rate junior subordinated debentures was equal to 100% of the principal amount plus accrued interest, up to, but not including, the redemption date. The proceeds from the redemption of the floating rate junior subordinated debentures was simultaneously applied to redeem all of the outstanding floating rate trust preferred securities at a price of 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company received all necessary regulatory approvals for the redemption. The redemption was funded with excess cash currently available to the Company.

On December 17, 2018, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of Trust III bearing an interest rate of three-month LIBOR plus 2.85% and maturing on December 17, 2033. The redemption price was price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust III and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust III, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust III trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture.

On January 7, 2019, the Company completed the redemption of $20.0 million in floating rate trust preferred securities of Trust II bearing an interest rate of three-month LIBOR plus 2.85% and maturing on October 7, 2033. The redemption price was price was 100% of the aggregate liquidation amount of the securities plus accumulated but unpaid distributions up to but not including the redemption date. The Company also redeemed $0.6 million of common securities issued by Trust II and held by the Company, as a result of the concurrent redemption of 100% of the principal assets of Trust II, or $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust II trust preferred securities. The redemption was pursuant to the optional prepayment provisions of the indenture. On January 22, 2019, Trust II was canceled with the state of Delaware.

In September 2004, we created a wholly-owned statutory trust, CPB Capital Trust IV ("Trust IV"). Trust IV issued $30.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 2.45% and maturing on

December 15, 2034. The principal assets of Trust IV are $30.9 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust IV trust preferred securities. Trust IV issued $0.9 million of common securities to the Company.

In December 2004, we created a wholly-owned statutory trust, CPB Statutory Trust V ("Trust V"). Trust V issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 1.87% and maturing on December 15, 2034. The principal assets of Trust V are $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust V trust preferred securities. Trust V issued $0.6 million of common securities to the Company.

The Company is not considered the primary beneficiary of Trusts II, III, IV and V, therefore the trusts are not considered a variable interest entity and are not consolidated in the Company's financial statements. Rather the subordinated debentures are shown as a liability on the Company's consolidated balance sheets. The Company's investment in the common securities of the trusts are included in investment in unconsolidated subsidiaries in the Company's consolidated balance sheets.

The floating rate trust preferred securities, the junior subordinated debentures that are the assets of Trusts IV and V and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date on or after December 15, 2009 for Trust IV and V, or at any time in whole but not in part within 90 days following the occurrence of certain events. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer interest payments on the subordinated debentures, which would result in a deferral of distribution payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.

The subordinated debentures may be included in Tier 1 capital, with certain limitations applicable, under current regulatory guidelines and interpretations.