Borrowings

12 Months Ended

Dec. 31, 2020

BORROWINGS

The following table summarizes the Company's short-term borrowings, long-term borrowings and subordinated debentures as presented on the consolidated statements of condition for the dates indicated:


	December 31, 2020				Contractual Maturity												December 31, 2019
(Dollars in thousands)	Outstanding Balance		Weighted Average Contractual Rate		2021		2022		2023		2024		2025		Thereafter		Outstanding Balance		Weighted Average Contractual Rate
Short-Term Borrowings:
FHLBB borrowings	$	—			$	—	$	—	$	—	$	—	$	—	$	—	$	25,000
Customer repurchase agreements	162,439				162,439		—		—		—		—		—		237,984
FHLBB and correspondent bank overnight borrowings	—				—		—		—		—		—		—		5,825

Total short-term borrowings	$	162,439	0.34	%	$	162,439	$	—	$	—	$	—	$	—	$	—	$	268,809	1.28	%
Long-Term Borrowings:
FHLBB borrowings	$	25,000	0.98	%	$	—	$	—	$	—	$	—	$	25,000	$	—	$	10,000	1.87	%
Total long-term borrowings	$	25,000	0.98	%	$	—	$	—	$	—	$	—	$	25,000	$	—	$	10,000	1.87	%
Subordinated Debentures:
Subordinated debentures(1)	$	15,000	5.50	%	$	—	$	—	$	—	$	—	$	15,000	$	—	$	14,749	5.50	%
CCTA(2)	36,083		1.64	%	—		—		—		—		—		36,083		36,083		3.36	%
UBCT(2)	8,248		1.66	%	—		—		—		—		—		8,248		8,248		3.41	%
Total subordinated debentures	$	59,331	2.62	%	$	—	$	—	$	—	$	—	$	15,000	$	44,331	$	59,080	3.90	%

(1) The outstanding balance of subordinated debentures was presented net of debt issuance costs of $0 and $251,000 at December 31, 2020 and 2019, respectively.

(2) The Company has interest rate swap contracts on certain borrowings. Refer to Note 12 for further discussion of derivative instruments.

FHLBB Borrowings

The terms of the Company's outstanding FHLBB borrowings, including overnight funding, were as follows as of the dates indicated:


	December 31,
(Dollars in thousands)	2020				2019
Stated Maturity	Outstanding Balance		Weighted Average Contractual Rate		Outstanding Balance		Weighted Average Contractual Rate
January 2020	$	—	—	%	$	30,825	1.79	%
April 2020	—		—	%	10,000		1.87	%
March 2025	25,000		0.98	%	—		—	%
Total	$	25,000			$	40,825

The Company's outstanding FHLBB borrowings at December 31, 2020 and 2019 did not contain any call options. However, in February 2021, the Company terminated its $25.0 million FHLBB borrowing contract, with a maturity date in 2025, and incurred a one-time prepayment penalty of $514,000.

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 $1.3 billion and $1.4 billion at December 31, 2020 and 2019. The carrying value of investment securities pledged as collateral at the FHLBB was $38,000 and $150,000 at December 31, 2020 and 2019, respectively.

Subordinated Debentures

The Company issued $15.0 million of subordinated debt on October 8, 2015, which qualifies as Tier 2 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 2 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 scheduled to mature on October 15, 2025, however in March 2021, the Company announced its intent to call the subordinated debt in full at par, plus accrued and unpaid interest, on April 16, 2021. At December 31, 2020, the Company's $15.0 million of subordinated debt provided $12.0 million of Tier 2 capital, or 37 basis points of the Total risk-based capital ratio. The Company's Total risk-based capital ratio will exceed regulatory requirements, including the capital conservation buffer, after the exercise of the call option.

The Company incurred certain costs associated with the issuance of $15.0 million of subordinated debt. The Company capitalized these costs and they have been presented within subordinated debentures on the consolidated statements of condition. At December 31, 2020 and 2019, net debt issuance costs were $0 and $251,000, respectively. Debt issuance costs amortize over the expected life of the related debt. For the year ended December 31, 2020 and 2019 the amortization expense for debt issuance costs were $251,000 and $115,000, respectively, and were 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 and was presented within other assets on the consolidated statements of condition. The contract interest rate of the trust preferred securities is three-month LIBOR plus 140 basis points. At December 31, 2020 and 2019, the interest rate on the trust preferred securities was 1.64% and 3.36%, respectively. 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 at any time.

In connection with an acquisition in 2008, the Company assumed $8.0 million of trust preferred securities, held through a Delaware trust affiliate, UBCT. In 2006, an aggregate principal amount of $8.2 million of 30-year junior subordinated debt securities were issued to UBCT. The Company owns all of the $248,000 of outstanding common securities of UBCT, and was presented within other assets on the consolidated statements of condition. The Company is obligated to pay interest on their principal sum quarterly. The contract interest rate of the trust preferred securities is the average three-month LIBOR plus 1.42%. At December 31, 2020 and 2019, the interest rate on the trust preferred securities was 1.66% and 3.41%, respectively. The debt securities mature on April 7, 2036, but may be redeemed by the Company at par, in whole or in part, 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.

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, 2020, $43.0 million of the trust preferred securities were included in the Company’s total Tier 1 capital and amounted to 9.6% of Tier 1 capital of the Company.

The Company has a notional amount of $53.0 million in interest rate swap agreements on its junior subordinated debentures, which includes a $10.0 million forward-starting interest rate swap with an effective date of June 30, 2021. Further discussion on the terms and accounting for the interest rate swap agreements is included within Note 12 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 $3.5 million, $3.3 million, and $3.4 million for the year ended December 31, 2020, 2019 and 2018, respectively. Refer to Note 12 of the consolidated financial statements for information pertaining to the reclassification of OCI into earnings on the interest rate swaps.

Credit Lines

At December 31, 2020, the Company has the following lines of credit available to it, for which it had no outstanding balances:

•The Bank had an available line of credit with the FHLBB of $9.9 million at December 31, 2020 and 2019. 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 has an unsecured $10.0 million line of credit with PNC Bank that has a maturity date of December 17, 2021 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 $54.2 million through the FRB's Discount Window for which the interest rate is set by the FRB daily. At December 31, 2020, the Bank pledged commercial loans with a carrying value of $80.8 million and investment securities of $4,000.