BORROWINGS

6 Months Ended

Jun. 30, 2020

Borrowings [Abstract]

Borrowings

Note 8 – BORROWINGS

Subordinated Debt

On November 5, 2019, the Company completed an offering of $175.0 million aggregate principal amount Fixed to Floating Rate Subordinated Notes due in 2029. The notes bear a fixed interest rate of 4.25% per year through November 14, 2024. Beginning November 15, 2024, the interest rate will become a floating rate equal to three month LIBOR, or an alternative benchmark rate as determined pursuant to the terms of the indenture for the notes in the event LIBOR has been discontinued by November 15, 2024, plus 262 basis points through the remaining maturity or early redemption date of the notes. The interest will be paid in arrears semi-annually during the fixed rate period and quarterly during the floating rate period. The Company incurred $2.9 million of debt issuance costs which are being amortized through the contractual life of the debt. The entire amount of the subordinated debt is considered Tier 2 capital under current regulatory guidelines.

In conjunction with the acquisition of WashingtonFirst Bankshares, Inc., the Company assumed $25.0 million in subordinated debt with an associated purchase premium at acquisition of $2.2 million, which will be amortized over the contractual life of the obligation. The subordinated debt has a ten year term, maturing on October 15, 2025, is non-callable until October 15, 2020 and currently bears a fixed interest rate of 6.00% per annum, payable semi-annually. Beginning on October 5, 2020, the interest rate resets quarterly to an amount equal to 3 month LIBOR plus 467 basis points. The entire amount of the subordinated debt is considered Tier 2 capital under current regulatory guidelines.

Also in conjunction with the acquisition of WashingtonFirst Bankshares, Inc., the Company also assumed $10.3 million in callable junior subordinated debt securities with an associated purchase premiums at acquisition of $0.1 million that will amortize over the contractual life of the obligation. During the first quarter of 2020, the Company redeemed all $10.3 million of the outstanding principal balance of the callable junior subordinated debt securities.

In conjunction with the acquisition of Revere, the Company assumed $31.0 million in subordinated debt with an associated purchase premium at acquisition of $0.2 million, which will be amortized through the call date. The subordinated debt has a ten year term, maturing on September 30, 2026, is non-callable until September 30, 2021, and currently bears a fixed interest rate of 5.625% per annum, payable semi-annually. Beginning on October 1, 2021, the interest rate resets quarterly to an amount equal to 3 month LIBOR plus 441 basis points. The entire amount of the subordinated debt is considered Tier 2 capital under current regulatory guidelines.

The following table provides information on subordinated debt as of the date indicated:

(In thousands)		June 30, 2020		December 31, 2019
Subordinated debt		$	231,000	$	200,000
	Add: Purchase accounting premium		2,052		1,894
	Less: Debt issuance costs		(2,751)		(2,885)
Trust preferred capital notes			-		10,310
	Add: Purchase accounting premium		-		87
Total subordinated debt		$	230,301	$	209,406

Other Borrowings

At June 30, 2020 and December 31, 2019, the Company had $143.6 million and $138.6 million, respectively, of outstanding retail repurchase agreements. The Company did not have any outstanding federal funds purchased at June 30, 2020 and had $75million of outstanding federal funds purchased at December 31, 2019. At June 30, 2020 the Company had $845.0 million in Paycheck Protection Program Liquidity Facility borrowings outstanding, which were borrowed to facilitate funding for PPP loans issued during the period.

At June 30, 2020 and December 31, 2019, the Company had $451.8 million and $513.8 million, respectively, of advances from the Federal Home Loan Bank of Atlanta (“FHLB”). During the second quarter of 2020, the Company assumed $168.4 million of FHLB advances in connection with the acquisition of Revere, with a fair value premium of $5.8 million recorded at acquisition. During the quarter ended June 30, 2020, the Company prepaid $115.4 million of the acquired advances and recognized a prepayment penalty of $5.9 million, which is reflected in Other expenses in the Condensed Consolidated Statements of Income/ (Loss). Also in connection with the prepayment, the Company recognized the remaining unamortized fair value premium of $5.8 million on those prepaid advances, which is reflected in Interest on advances from FHLB in the Condensed Consolidated Statements of Income/ (Loss). The remaining $53.0 million of acquired Revere FHLB advances, which were not prepaid, matured during the quarter ended June 30, 2020.

At June 30, 2020, the Company had an available line of credit with the FHLB under which its borrowings are limited to $2.4 billion based on pledged collateral at prevailing market interest rates, with $451.8 million borrowed against it at June 30, 2020. At December 31, 2019, lines of credit totaled $2.4 billion based on pledged collateral with $513.8 million borrowed against the line. Under a blanket lien, the Company has pledged qualifying residential mortgage loans amounting to $993.4 million, commercial real estate loans amounting to $1.9 billion, home equity lines of credit (“HELOC”) amounting to $236.4 million, and multifamily loans amounting to $157.1 million at June 30, 2020, as collateral under the borrowing agreement with the FHLB. At December 31, 2019 the Company had pledged collateral of qualifying mortgage loans of $1.0 billion, commercial real estate loans of $1.9 billion, HELOC loans of $266.8 million, and multifamily loans of $109.7 million under the FHLB borrowing agreement. The Company also had lines of credit available from the Federal Reserve and correspondent banks of $383.5 million and $463.3 million at June 30, 2020 and December 31, 2019,

respectively, collateralized by loans. In addition, the Company had unsecured lines of credit with correspondent banks of $880.0 million and $730.0 million at June 30, 2020 and December 31, 2019, respectively. At June 30, 2020, the Company did not have any outstanding borrowings against these unsecured lines of credit.