BORROWINGS

12 Months Ended

Dec. 31, 2020

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 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. The associated purchase premium at acquisition was $2.2 million, the premium is amortized over the contractual life of the obligation. The subordinated debt has a maturity of ten years, is due in full on October 15, 2025, and was non-callable through October 15, 2020. The subordinated debt held a fixed interest rate of 6.00% per annum through October 5, 2020 at which point the rate became variable at the three-month LIBOR plus 457 basis points, payable quarterly. As of December 31, 2020, the effective variable rate was 4.81%. Under regulatory capital guidelines subordinated debt begins to phase out of Tier 2 capital qualification, on an annual straight-line basis, when there are five years remaining until the subordinated debt matures. The WashingtonFirst subordinated debt has less than five years but more than four years remaining until it matures, and therefore, as of December 31, 2020, $20.0 million 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. 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 three-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 debentures for the period indicated:


(In thousands)	2020		2019
Fixed to floating rate sub debt, 4.25%	$	175,000	$	175,000
WashingtonFirst sub debt, 4.81%	25,000		25,000
Revere fixed to floating rate sub debt, 5.625%	31,000		—
Total Sub debt	231,000		200,000
Less: WashingtonFirst and Revere sub debt held as investments by Sandy Spring	(3,000)		—
Add: Purchase accounting premium	1,669		1,894
Less: Debt issuance costs	(2,581)		(2,885)
Net sub debt	227,088		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	$	227,088	$	209,406

Other Borrowings

Information relating to retail repurchase agreements and federal funds purchased is presented in the following table at and for the years ending December 31:


	2020				2019				2018
(Dollars in thousands)	Amount		Rate		Amount		Rate		Amount		Rate
End of period:
Retail repurchase agreements	$	153,157	0.11	%	$	138,605	0.58	%	$	137,429	0.51	%
Federal funds purchased	390,000		0.10		75,000		1.62		—		—
Average for the year:
Retail repurchase agreements	$	142,283	0.32	%	$	134,070	0.54	%	$	142,938	0.34	%
Federal funds purchased	367,240		0.41		17,373		2.43		—		—
Maximum month-end balance:
Retail repurchase agreements	$	153,157			$	152,685			$	154,435
Federal funds purchased	921,289				75,000				—

The Company pledges U.S. Agencies securities, based upon their market values, as collateral for greater than 102.5% of the principal of its retail repurchase agreements.

At December 31, 2020, the Company had an available line of credit with the FHLB under which its borrowings are limited to $3.0 billion based on pledged collateral at prevailing market interest rates with $379.1 million borrowed against it at December 31, 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 $1.0 billion, commercial real estate loans amounting to $2.8 billion, home equity lines of credit (“HELOC”) amounting to $226.2 million and multifamily loans amounting to $237.6 million at December 31, 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 secured lines of credit available from the Federal Reserve and correspondent banks of $276.2 million and $463.3 million at December 31, 2020 and 2019, respectively, collateralized by loans. In addition, the Company had unsecured lines of credit with correspondent banks of $1.1 billion and $730.0 million at December 31, 2020 and 2019. At December 31, 2020, the total outstanding borrowings against these unsecured lines of credit was $390.0 million.

At December 31, 2020, the Company did not have any borrowings outstanding of the $1.1 billion available to borrow under the Paycheck Protection Program Liquidity Facility ("PPPLF"). Amounts borrowed under the PPPLF are required to be repaid as PPP loans are repaid or forgiven.

Advances from the FHLB and the respective maturity schedule at December 31 for the years indicated consisted of the following:


	2020				2019
(Dollars in thousands)	Amounts		Weighted Average Rate		Amounts		Weighted Average Rate
Maturity:
One year	$	230,243	2.39	%	$	134,167	2.13	%
Two years	76,332		2.37		230,445		2.39
Three years	72,500		3.12		76,665		2.37
Four years	—		—		72,500		3.12
Five years	—		—		—		—
After five years	—		—		—		—
Total advances from FHLB	$	379,075	2.52		$	513,777	2.42