BORROWINGS

9 Months Ended

Sep. 30, 2020

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. ("WashingtonFirst"), 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, the Company assumed $10.3 million in callable junior subordinated debt securities with an associated purchase premium 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)	September 30, 2020		December 31, 2019
Fixed to floating rate sub debt, 4.25%	$	175,000	$	175,000
WashingtonFirst sub debt, 6.00%	25,000		25,000
Revere fixed to floating rate sub debt, 5.625%	31,000		—
Total Sub debt	231,000		200,000
Add: Purchase accounting premium	1,954		1,894
Less: Debt issuance costs	(2,654)		(2,885)
Net sub debt	230,300		199,009
WashingtonFirst callable junior subordinated debt	—		10,310
Add: Purchase accounting premium	—		87
Net WashingtonFirst callable junior subordinated debt	—		10,397
Long-term borrowings	$	230,300	$	209,406

Other Borrowings

At September 30, 2020 and December 31, 2019, the Company had $142.3 million and $138.6 million, respectively, of outstanding retail repurchase agreements. The Company had $70.0 million and $75.0 million of outstanding federal funds purchased at September 30, 2020 and December 31, 2019, respectively. During the quarter ended September 30, 2020, the Company repaid $594.6 million of Paycheck Protection Program Liquidity Facility ("PPPLF") borrowings, which were used to fund PPP loans issued during the prior quarter. At September 30, 2020, $250.4 million in PPPLF borrowings remained outstanding. The Company had $837.7 million available to borrow under the PPPLF at September 30, 2020. Amounts borrowed under the PPPLF are required to be repaid as the Company’s PPP loans are repaid or forgiven.

At September 30, 2020 and December 31, 2019, the Company had $444.2 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 was reflected in Other expenses in the Condensed Consolidated Statements of Income. Also in connection with the prepayment, the Company recognized the remaining unamortized fair value premium of $5.8 million on those prepaid advances, which was reflected in Interest on advances from FHLB in the Condensed Consolidated Statements of Income. The remaining $53.0 million of acquired Revere FHLB advances, which were not prepaid, matured during the quarter ended June 30, 2020.

At September 30, 2020, the Company had an available line of credit with the FHLB under which its borrowings are limited to $2.3 billion based on pledged collateral at prevailing market interest rates, with $444.2 million borrowed against it at September 30, 2020. At December 31, 2019, lines of credit with the FHLB 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 $1.0 billion, commercial real estate loans amounting to $2.7 billion, home equity lines of credit (“HELOC”) amounting to $227.0 million, and multifamily loans amounting to $235.7 million at September 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 Bank and correspondent banks of $366.5 million and $463.3 million at September 30, 2020 and December 31, 2019, respectively, collateralized by loans. In addition, the Company had unsecured lines of credit with correspondent banks of $780.0 million and $730.0 million at September 30, 2020 and December 31, 2019, respectively. At September 30, 2020, the Company had $70.0 million outstanding borrowings against these unsecured lines of credit.