Short and Long-Term Funding

9 Months Ended

Sep. 30, 2020

The following table presents the components of short-term funding (funding with original contractual maturities of one year or less), long-term funding (funding with original contractual maturities greater than one year), and FHLB advances (funding based on original contractual maturities):


($ in Thousands)	September 30, 2020		December 31, 2019
Short-Term Funding
Federal funds purchased	$	7,575	$	362,000
Securities sold under agreements to repurchase	147,754		71,097
Federal funds purchased and securities sold under agreements to repurchase	155,329		433,097
Commercial paper	50,987		32,016
Total short-term funding	$	206,316	$	465,113
Long-Term Funding

Bank senior notes, at par, due 2021	$	300,000	$	300,000
Corporation subordinated notes, at par, due 2025	250,000		250,000
PPPLF	1,022,217		—
Finance leases	1,165		2,209
Capitalized costs	(1,964)		(2,866)
Total long-term funding	1,571,418		549,343
Total short and long-term funding, excluding FHLB advances	$	1,777,735	$	1,014,456
FHLB Advances
Short-term FHLB advances	$	—	$	520,000
Long-term FHLB advances	1,706,763		2,660,967
Total FHLB advances	$	1,706,763	$	3,180,967

Total short and long-term funding	$	3,484,498	$	4,195,422

Securities Sold Under Agreements to Repurchase ("Repurchase Agreements")

The Corporation enters into agreements under which it sells securities subject to an obligation to repurchase the same or similar securities. Under these arrangements, the Corporation may transfer legal control over the assets but still retain effective control through an agreement that both entitles and obligates the Corporation to repurchase the assets. The obligation to repurchase the securities is reflected as a liability on the Corporation’s consolidated balance sheets, while the securities underlying the repurchase agreements remain in the respective investment securities asset accounts (i.e., there is no offsetting or netting of the investment securities assets with the repurchase agreement liabilities). See Note 11 for additional disclosures on balance sheet offsetting.

The Corporation utilizes securities sold under agreements to repurchase to facilitate the needs of its customers. As of September 30, 2020, the Corporation pledged agency mortgage-related securities with a fair value of $246 million as collateral for the repurchase agreements. Securities pledged as collateral under repurchase agreements are maintained with the Corporation's safekeeping agents and are monitored on a daily basis due to the market risk of fair value changes in the underlying securities. The Corporation generally pledges excess securities to ensure there is sufficient collateral to satisfy short-term fluctuations in both the repurchase agreement balances and the fair value of the underlying securities.

The remaining contractual maturity of the securities sold under agreements to repurchase on the consolidated balance sheets as of September 30, 2020 and December 31, 2019 are presented in the following table:


	Remaining Contractual Maturity of the Agreements
($ in Thousands)	Overnight and Continuous		Up to 30 days		30-90 days		Greater than 90 days		Total
September 30, 2020
Repurchase agreements
Agency mortgage-related securities	$	147,754	$	—	$	—	$	—	$	147,754
Total	$	147,754	$	—	$	—	$	—	$	147,754
December 31, 2019
Repurchase agreements
Agency mortgage-related securities	$	71,097	$	—	$	—	$	—	$	71,097
Total	$	71,097	$	—	$	—	$	—	$	71,097

Long-Term Funding

Senior Notes

In August 2018, the Bank issued $300 million of senior notes, due August 2021, and callable July 2021. The senior notes have a fixed coupon interest rate of 3.50% and were issued at a discount.

Subordinated Notes

In November 2014, the Corporation issued $250 million of 10-year subordinated notes, due January 2025, and callable October 2024. The subordinated notes have a fixed coupon interest rate of 4.25% and were issued at a discount.

Paycheck Protection Program Liquidity Facility

In connection with the funding of PPP loans, the Corporation has utilized the PPPLF. These borrowings from the Federal Reserve Bank match the term of the underlying loan, which has been pledged to secure the borrowings, with original terms of two or five years. The rate of this funding is 0.35%. The Corporation began submitting PPP forgiveness applications to the SBA on behalf of our customers on September 14, 2020. Forgiveness payments from the SBA began to be received early in the fourth quarter. The Corporation believes we will receive a modest amount of forgiveness payments yet in 2020, with the majority to be received in 2021, therefore the expected maturity is less than the contractual terms of two or five years.

Finance Leases

In connection with the construction of new branches in Oshkosh and Eau Claire, Wisconsin, the Corporation entered into land leases with options to purchase the underlying land for a fixed price, which the Corporation now expects to exercise. The finance leases have fixed interest rates of approximately 1.00%. See Note 18 for additional disclosure regarding the Corporation’s leases.

FHLB Advances

At September 30, 2020, the Corporation had $1.7 billion of FHLB advances, down $1.5 billion, or 46%, from December 31, 2019. This is primarily due to the Corporation's prepayment of $950 million in long-term FHLB advances in the third quarter of 2020. As a result, the Corporation incurred a $45 million loss on the prepayment. In addition, short-term FHLB advances decreased $520 million from December 31, 2019.