BORROWINGS

6 Months Ended

Jun. 30, 2021

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. The premium is amortized over the contractual life of the obligation. The subordinated debt had a maturity of 10 years, maturing 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 June 30, 2021, the effective variable rate was 4.75%. 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. As of June 30, 2021, the WashingtonFirst subordinated debt had less than five years but more than four years remaining until it matures, and therefore, as of that date, $20.0 million of the subordinated debt was considered Tier 2 capital under current regulatory guidelines. On July 15, 2021, the Company redeemed the entire outstanding principal balance of the WashingtonFirst subordinated debt.

In conjunction with the acquisition of Revere Bank ("Revere"), the Company assumed $31.0 million in subordinated debt with an associated purchase premium at acquisition of $0.2 million, which is being amortized through the call date. The subordinated debt has a 10-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 debt as of the date indicated:


(In thousands)	June 30, 2021		December 31, 2020
Fixed to floating rate sub debt, 4.25%	$	175,000	$	175,000
WashingtonFirst sub debt, 4.75%	25,000		25,000
Revere fixed to floating rate sub debt, 5.625%	31,000		31,000
Total Sub debt	231,000		231,000
Less: Debt held as investments by Sandy Spring	(3,000)		(3,000)
Add: Purchase accounting premium	1,433		1,669
Less: Debt issuance costs	(2,435)		(2,581)




Long-term borrowings	$	226,998	$	227,088

Other Borrowings

At June 30, 2021 and December 31, 2020, the Company had $140.7 million and $153.2 million, respectively, of outstanding retail repurchase agreements. The Company had no outstanding federal funds purchased at June 30, 2021 and $390.0 million at December 31, 2020. At June 30, 2021, the Company did not have any borrowings outstanding of the $897.2 million 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.

At June 30, 2021, the Company had an available line of credit with the FHLB under which its borrowings are limited to $3.9 billion based on pledged collateral at prevailing market interest rates, with no outstanding borrowings against it at June 30, 2021. At December 31, 2020, lines of credit with the FHLB totaled $3.0 billion based on pledged collateral with $379.1 million borrowed against the line. During the six months ended June 30, 2021, the Company early repaid $279.0 million of FHLB advances, resulting in a prepayment penalty of $9.1 million, which was recorded to other expense in the Condensed Consolidated Statements of Income.

Under a blanket lien, the Company has pledged qualifying residential mortgage loans amounting to $846.7 million, commercial real estate loans amounting to $2.8 billion, home equity lines of credit (“HELOC”) amounting to $231.1 million, and multifamily loans amounting to $261.9 million at June 30, 2021, as collateral under the borrowing agreement with the FHLB. At December 31, 2020, the Company had pledged collateral of qualifying mortgage loans of $1.0 billion, commercial real estate loans of $2.8 billion, HELOC loans of $226.2 million, and multifamily loans of $237.6 million under the FHLB borrowing agreement. The Company also had secured lines of credit available from the Federal Reserve Bank and correspondent banks of $452.9 million and $276.2 million at June 30, 2021 and December 31, 2020, respectively, collateralized by loans, with no

borrowings outstanding at the end of either period. In addition, the Company had unsecured lines of credit with correspondent banks of $1.2 billion and $1.1 billion at June 30, 2021 and December 31, 2020, respectively. Of the unsecured lines of credit available there were no outstanding borrowings at June 30, 2021 and $390.0 million outstanding at December 31, 2020.