Borrowings

Short-term borrowings consist of customer repurchase agreements, FHLBB advances due in less than 90 days, FHLBB and correspondent bank overnight borrowings, and other short-term borrowings due within one year. The Bank had an available line of credit with the FHLBB of $9.9 million at December 31, 2016 and 2015. This line of credit serves as overdraft protection should the Company overdraw its account with the FHLBB. The interest rate for this line of credit is set daily by the FHLBB. The Company had no outstanding balance on the line of credit with the FHLBB at December 31, 2016 or 2015.

Long-term borrowings represent securities sold under repurchase agreements with major brokerage firms and notes payable with maturity dates over one year. Both wholesale and retail repurchase agreements are secured by mortgage-backed securities and securities of government sponsored enterprises.

At December 31, 2016, the Company has the following lines of credit available to it, for which it had no outstanding balances:


•	The Company has an unsecured $10.0 million line of credit with PNC Bank that has a maturity date of December 20, 2017 for which the interest rate is LIBOR-based and is set daily by PNC Bank.


•	The Company, through the Bank, has an unsecured $50.0 million line of credit with PNC Bank for which the interest rate is set daily by PNC Bank.


•	The Company, through the Bank, has a secured line of credit of $72.3 million through the FRB's Discount Window for which the interest rate is set by the FRB daily. At December 31, 2016, the Bank pledged commercial loans with a carrying value of $115.0 million and investment securities of $73,000.

The following table summarizes short term and long term borrowings as presented on the consolidated statements of condition at:



	December 31,
	2016		2015
Short-Term Borrowings (mature within one year):
Customer repurchase agreements	$	225,605	$	184,989
FHLBB borrowings	210,000		255,000
FHLBB and correspondent bank overnight borrowings	89,450		12,800
Wholesale repurchase agreements	5,007		25,000
Capital lease obligation	67		63
Total short-term borrowings	$	530,129	$	477,852
Long-Term Borrowings (maturity greater than one year) :
FHLBB borrowings	$	10,000	$	30,000
Capital lease obligation	791		859
Wholesale repurchase agreements	—		5,052
Total long-term borrowings	$	10,791	$	35,911

The table below provides information on the Company's borrowings classified as short-term for the dates indicated:



	December 31,
	2016			2015
Balance outstanding at end of year	$	530,129		$	477,852
Weighted average interest rate	0.74		%	0.57		%

At December 31, 2016, the terms of the Company's outstanding FHLBB borrowings were as follows:



Balance Sheet Classification	Outstanding Balance		Maturity Date	Interest Rate Range	Next Call Date	Call Amount
Short-Term Borrowings	$	190,000	January 2017	0.73% - 0.84%	N/A	—
Short-Term Borrowings	20,000		July 2017	3.99% - 4.06%	January 2017	$	20,000
Long-Term Borrowings	$	10,000	April 2020	1.87%	N/A	—

FHLBB borrowings are collateralized by a blanket lien on qualified collateral consisting primarily of loans with first mortgages secured by one- to four-family properties, certain commercial real estate loans, certain pledged investment securities and other qualified assets. The carrying value of residential real estate and commercial loans pledged as collateral was $1.1 billion at December 31, 2016 and 2015. The carrying value of securities pledged as collateral at the FHLBB was $400,000 and $544,000 at December 31, 2016 and 2015, respectively.

At December 31, 2016 and 2015, the Company had one outstanding wholesale repurchase agreement totaling $5.0 million with a maturity date of March 1, 2017 at an interest rate of 4.67% per annum. There are no remaining call dates prior to maturity.

Subordinated Debentures

The Company issued $15.0 million of subordinated debt on October 8, 2015, which qualifies as Tier II regulatory capital. The interest rate on the subordinated debt is 5.50% per annum, fixed for the ten-year term and payable semi-annually on April 15 and October 15 each year. The Company can redeem the subordinated debt at par starting on October 15, 2020 plus accrued and unpaid interest, or earlier if (i) they no longer qualify as Tier II capital for regulatory capital purposes; (ii) a change in law that prevents the Company from deducting interest payable for U.S. federal income tax purposes, or (iii) the Company is required to register as an investment company pursuant to the Investment Company Act of 1940. The subordinated debt is schedule to mature on October 15, 2025.

The Company incurred issuance costs of $536,000 associated with this debt issuance. The Company capitalized these costs and they have been presented within subordinated debentures on the consolidated statements of condition. The Company will amortize the issuance costs over the ten-year term of the subordinated debt. The amortization costs incurred for the year ended December 31, 2016 and 2015 associated with the debt issuance were $54,000 and $9,000, respectively, and was recognized as an increase to interest expense within the consolidated statements of income.

In April 2006, the Company formed CCTA, which issued and sold trust preferred securities to the public. The Company received $36.1 million from the issuance of the trust preferred securities in return for junior subordinated debentures issued by the Company to CCTA. The Company owns all of the $1.1 million of outstanding common securities of CCTA. The interest rate of the trust preferred securities was fixed at 6.71% through June 2011 and now floats at the 3 month LIBOR plus 140 basis points. The proceeds from the offering were used to repurchase Company common stock under the tender offer completed in May 2006. The trust preferred securities, which pay interest quarterly at the same rate as the junior subordinated debentures held by CCTA, are mandatorily redeemable on June 30, 2036, or may be redeemed by CCTA at par any time on or after June 30, 2011.

In connection with the acquisition of Union Bankshares Company in 2008, the Company assumed $8.0 million of trust preferred securities, held through a Delaware trust affiliate, UBCT. In 2006, Union Bankshares Company issued an aggregate principal amount of $8.2 million of 30-year junior subordinated deferrable interest debt securities to UBCT. The Company owns all of the $248,000 of outstanding common securities of UBCT. The debt securities obligate the Company to pay interest on their principal sum quarterly in arrears on January 7, April 7, July 7, and October 7 of each year. The interest rate of the trust preferred securities until April 7, 2011 was a blended rate equal to the sum of (1) the product of 50% times the average three-month LIBOR plus 1.42%, plus (2) the product of 50% times 6.4725%. The rate is now the average three-month LIBOR plus 1.42%. The debt securities mature on April 7, 2036, but may be redeemed by the Company, in whole or in part, beginning on April 7, 2011, on any interest payment date. The debt securities may also be redeemed by the Company in whole or in part, within 90 days of the occurrence of certain special redemption events as defined in the Indenture.

CCTA and UBCT are Delaware statutory trusts created for the sole purpose of issuing trust preferred securities and investing the proceeds in junior subordinated debentures of the Company. The junior subordinated debentures are the sole assets of the trusts. The Company is the owner of all of the common securities of CCTA and UBCT and fully and unconditionally guarantees each trust’s securities obligations. In accordance with GAAP, CCTA and UBCT are treated as unconsolidated subsidiaries. The common stock investment in the statutory trusts is included in other assets on the consolidated statements of condition. At December 31, 2016, $43.0 million of the trust preferred securities were included in the Company’s total Tier I capital and amounted to 13.0% of Tier I capital of the Company.

The Company has a notional amount of $43.0 million in interest rate swap agreements on its junior subordinated debentures. Further discussion on the terms and accounting for the interest rate swap agreements is included within Note 18 of the consolidated financial statements.

Interest expense on the subordinated debentures, including the effective portion of the associated interest rate swaps on these debt instruments reclassified from OCI into earnings, totaled $3.4 million, $2.7 million and $2.5 million for the year ended December 31, 2016, 2015 and 2014, respectively. Refer to Note 18 of the consolidated financial statements for information pertaining to the reclassification of OCI into earnings on the interest rate swaps.