OTHER BORROWINGS

Other borrowings, which Heartland defines as borrowings with an original maturity date of more than one year, outstanding at December 31, 2018 and 2017, are shown in the table below, net of discount and issuance costs amortization, in thousands:



	2018		2017
Advances from the FHLB; weighted average interest rates were 4.03% and 3.22% at December 31, 2018 and 2017, respectively	$	3,399	$	6,702
Wholesale repurchase agreements	—		30,000
Trust preferred securities	130,913		121,886
Senior notes	5,000		11,000
Note payable to unaffiliated bank	58,417		33,667
Contracts payable for purchase of real estate and other assets	1,953		1,881
Subordinated notes	74,143		74,000
Other borrowings	1,080		5,875
Total	$	274,905	$	285,011

The Heartland banks are members of the FHLB of Des Moines, Chicago, Dallas, San Francisco and Topeka. At December 31, 2018, none of Heartland's FHLB advances had call features. The advances from the FHLB are collateralized by a portion of the Heartland banks' investments in FHLB stock of $13.3 million and $11.3 million at December 31, 2018 and 2017, respectively. In addition, the FHLB advances are collateralized with pledges of one- to four-family residential mortgages, commercial and agricultural mortgages and securities totaling $3.71 billion at December 31, 2018, and $2.91 billion at December 31, 2017. At December 31, 2018, Heartland had $1.35 billion of remaining FHLB borrowing capacity.

Heartland has entered into various wholesale repurchase agreements, which had balances totaling $0 at December 31, 2018 and $30.0 million at December 31, 2017.

At December 31, 2018, Heartland had thirteen wholly-owned trust subsidiaries that were formed to issue trust preferred securities, which includes trust subsidiaries acquired in acquisitions since 2013. The proceeds from the offerings were used to purchase junior subordinated debentures from Heartland and were in turn used by Heartland for general corporate purposes. Heartland has the option to shorten the maturity date to a date not earlier than the callable date. Heartland may not shorten the maturity date without prior approval of the Board of Governors of the Federal Reserve System, if required. Prior redemption is permitted under certain circumstances, such as changes in tax or regulatory capital rules. Heartland repurchased and retired $15.0 million of Heartland Statutory Trust IV in 2017. The retired debt was part of an interest rate swap and Citywide Capital Trust V replaced the retired debt in the interest rate swap with no impact to income. Refer to Note 12, "Derivative Financial Instruments," regarding this swap replacement. In connection with these offerings of trust preferred securities, the balance of deferred issuance costs included in other borrowings was $107,000 as of December 31, 2018. These deferred costs are amortized on a straight-line basis over the life of the debentures. The majority of the interest payments are due quarterly. A schedule of Heartland’s trust preferred offerings outstanding, excluding deferred issuance costs, as of December 31, 2018, were as follows, in thousands:

Amount

Issued

Interest

Rate

Interest Rate as
of 12/31/18⁽¹⁾

Maturity

Date

Callable

Date

Heartland Financial Statutory Trust IV

10,310

2.75% over LIBOR

5.54%

⁽²⁾

03/17/2034

03/17/2019

Heartland Financial Statutory Trust V

20,619

1.33% over LIBOR

3.77%

⁽³⁾

04/07/2036

04/07/2019

Heartland Financial Statutory Trust VI

20,619

1.48% over LIBOR

4.27%

⁽⁴⁾

09/15/2037

03/15/2019

Heartland Financial Statutory Trust VII

20,619

1.48% over LIBOR

4.22%

⁽⁵⁾

09/01/2037

03/01/2019

Morrill Statutory Trust I

8,994

3.25% over LIBOR

6.07%

⁽⁶⁾

12/26/2032

03/26/2019

Morrill Statutory Trust II

8,642

2.85% over LIBOR

5.64%

⁽⁷⁾

12/17/2033

03/17/2019

Sheboygan Statutory Trust I

6,440

2.95% over LIBOR

5.74%

09/17/2033

03/17/2019

CBNM Capital Trust I

4,359

3.25% over LIBOR

6.04%

12/15/2034

03/15/2019

Citywide Capital Trust III

6,383

2.80% over LIBOR

5.32%

12/19/2033

04/23/2019

Citywide Capital Trust IV

4,238

2.20% over LIBOR

4.85%

09/30/2034

05/23/2019

Citywide Capital Trust V

11,523

1.54% over LIBOR

4.33%

07/25/2036

03/15/2019

OCGI Statutory Trust III

2,989

3.65% over LIBOR

6.44%

⁽⁸⁾

09/30/2032

03/30/2019

OCGI Capital Trust IV

5,286

2.50% over LIBOR

5.29%

⁽⁹⁾

12/15/2034

03/15/2019

131,021

(1) Effective weighted average interest rate as of December 31, 2018, was 5.56% due to interest rate swap transactions as discussed in Note 12 to Heartland's consolidated financial statements.

(2) Effective interest rate as of December 31, 2018, was 5.01% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(3) Effective interest rate as of December 31, 2018, was 4.69% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(4) Effective interest rate as of December 31, 2018, was 3.87% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(5) Effective interest rate as of December 31, 2018, was 3.83% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(6) Effective interest rate as of December 31, 2018, was 4.92% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(7) Effective interest rate as of December 31, 2018, was 4.51% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(8) Effective interest rate as of December 31, 2018, was 5.53% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

(9) Effective interest rate as of December 31, 2018, was 4.37% due to an interest rate swap transaction as discussed in Note 12 to Heartland's consolidated financial statements.

For regulatory purposes, $130.9 million and $121.9 million of the trust preferred securities qualified as Tier 1 capital as of December 31, 2018 and 2017, respectively.

The maturity schedule of the remaining senior notes is such that $5.0 million will mature in 2019. Total senior notes outstanding were $5.0 million at December 31, 2018 and $11.0 million on December 31, 2017.

In addition to the credit line described in Note 10, "Short-Term Borrowings," Heartland entered into another non-revolving credit facility with the same unaffiliated bank, which provided a borrowing capacity not to exceed $70.0 million when combined with the outstanding balance on its then existing amortizing term loan with the same unaffiliated bank. The borrowing capacity was reduced to $70.0 million from $75.0 million on June 14, 2018. On May 10, 2016, $40.0 million of this variable rate non-revolving credit facility was swapped to a fixed rate of 2.50% over LIBOR with an amortizing term of five years, which is due in April 2021, and was reclassified as long-term debt. At December 31, 2018, a balance of $58.4 million was outstanding on this term debt compared to $33.7 million at December 31, 2017. At December 31, 2018, $8.3 million was available on the non-revolving credit facility, of which no balance was outstanding.

On December 17, 2014, Heartland issued $75.0 million of subordinated notes with a maturity date of December 30, 2024. The notes were issued at par with an underwriting discount of $1.1 million. The interest rate on the notes is fixed at 5.75% per annum, payable semi-annually. The notes were sold to qualified institutional buyers, and the proceeds are being used for general corporate purposes. For regulatory purposes, $74.1 million of the subordinated notes qualified as Tier 2 capital as of December 31, 2018. In connection with the sale of the notes, the balance of deferred issuance costs included in other borrowings was $227,000 at December 31, 2018 and $265,000 at December 31, 2017. These deferred costs are amortized on a straight-line basis over the life of the notes.

Future payments at December 31, 2018, for other borrowings follow in the table below, in thousands. FHLB advances, wholesale repurchase agreements, convertible debt and subordinated debt are included in the table at their call date.



2019	$	13,612
2020	8,652
2021	24,665
2022	4,657
2023	3,037
Thereafter	220,282
Total	$	274,905