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BORROWINGS | 12 Months Ended
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Dec. 31, 2016
Debt Disclosure [Abstract] |
BORROWINGS | BORROWINGS Federal Home Loan Bank Borrowings Advances payable to the Federal Home Loan Bank as of December 31 are summarized as follows:
|  | 2016 |  | 2015
|  |  |  | Weighted |  |  |  | Weighted
|  |  |  | Average |  |  |  | Average
|  | Total |  | Contractual |  | Total |  | Contractual
|  | Outstanding |  | Rate |  | Outstanding |  | Rate
|  | (Dollars in thousands)
Stated Maturity |  |  |  |  |  |  |  |
2016 |  | $ | — |  |  | — | % |  | $ | 52,025 |  |  | 1.23 | %
2017 |  | 50,000 |  |  | 2.43 | % |  | 40,154 |  |  | 3.10 | %
2018 |  | — |  |  | — | % |  | 7,043 |  |  | 1.74 | %
2019 |  | — |  |  | — | % |  | 2,011 |  |  | 1.99 | %
Subtotal |  | 50,000 |  |  | 2.43 | % |  | 101,233 |  |  | 2.00 | %
Amortizing advances |  | 819 |  |  |  |  | 847 |  |  |
Total Federal Home Loan Bank Advances |  | $ | 50,819 |  |  |  |  | $ | 102,080 |  |  |
To manage the interest rate risk of these advances, the Company has entered into an interest rate swap which effectively converts $25.0 million of the FHLB advances to a fixed rate of 2.85% and 3.25% at December 31, 2016 and 2015, respectively. Inclusive of the impact of the swap, the weighted average rate of the FHLB borrowings was 3.42% in 2016 and 2.60% in the prior year. During 2016, exclusive of the impact from the NEB acquisition, the Company repaid $49.0 million of FHLB borrowings prior to the maturity date of the borrowings. This prepayment resulted in a loss on extinguishment of debt of $437,000. The Company also repaid $13.0 million of FHLB borrowings in 2015, resulting in a loss on extinguishment of debt of $122,000. The Company’s FHLB advances are collateralized by a blanket pledge agreement on the Bank’s FHLB stock, certain qualified investment securities, deposits at the FHLB, and by residential mortgages, and certain commercial real estate loans held in the Bank’s portfolio. The carrying value of the loans pledged as collateral for these borrowings totaled $1.4 billion at both December 31, 2016 and 2015. The Bank’s unused remaining available borrowing capacity at the FHLB was approximately $793.1 million and $777.5 million at December 31, 2016 and 2015, respectively, inclusive of a $5.0 million line of credit. At December 31, 2016 and 2015, the Company had sufficient collateral at the FHLB to support its obligations and was in compliance with the FHLB's collateral pledging program. Short-Term Debt The Company’s short-term borrowings of customer repurchase agreements amounted to $176.9 million and $134.0 million at December 31, 2016 and 2015, respectively. The interest expense on short-term borrowings was $208,000, $210,000, and $200,000 for the years ended December 31, 2016, 2015, and 2014, respectively. Customer Repurchase Agreements. The Company can raise additional liquidity by entering into repurchase agreements at its discretion. These repurchases are accounted for as a secured borrowing transaction for accounting purposes. Payments on such borrowings are interest only until the scheduled repurchase date. In a repurchase agreement the Company is subject to the risk that the purchaser may default at maturity and not return the securities underlying the agreements. In order to minimize this potential risk, the Company enter deals with customers whose agreements stipulate that the securities underlying the agreement are not delivered to the customer and instead are held in segregated safekeeping accounts by the Company's safekeeping agents. The table below sets forth information regarding the Company’s repurchase agreements allocated by source of collateral at the dates indicated:
| December 31, 2016
| Remaining Contractual Maturity of the Agreements
| Overnight and Continuous |  | Up to 30 Days |  | 30-90 Days |  | Greater than 90 Days |  | Total
| (Dollars in thousands)
Sources of Collateral |
U.S. government agency securities | $ | 20,233 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 20,233 |
Agency mortgage-backed securities | 79,079 |  |  | — |  |  | — |  |  | — |  |  | 79,079 |
Agency collateralized mortgage obligations | 77,601 |  |  | — |  |  | — |  |  | — |  |  | 77,601 |
Total borrowings | $ | 176,913 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 176,913 |
| December 31, 2015
| Remaining Contractual Maturity of the Agreements
| Overnight and Continuous |  | Up to 30 Days |  | 30-90 Days |  | Greater than 90 Days |  | Total
| (Dollars in thousands)
Sources of Collateral |
U.S. government agency securities | $ | 10,157 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 10,157 |
Agency mortgage-backed securities | 69,142 |  |  | — |  |  | — |  |  | — |  |  | 69,142 |
Agency collateralized mortgage obligations | 54,659 |  |  | — |  |  | — |  |  | — |  |  | 54,659 |
Total borrowings | $ | 133,958 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 133,958 |
Certain counterparties monitor collateral, and may request additional collateral to be posted from time to time. For further information regarding the Company's repurchase agreements see Note 12, Balance Sheet Offsetting. Long-Term Debt The following table summarizes long-term debt, net of debt issuances costs, as of the periods indicated:
| December 31
| 2016 |  | 2015
| (Dollars in thousands)
Junior subordinated debentures |  |  |
Capital Trust V | $ | 51,500 |  |  | $ | 51,497 |
Slades Ferry Trust I | 10,224 |  |  | 10,219 |
Central Trust I | 5,302 |  |  | 5,516 |
Central Trust II | 6,081 |  |  | 6,074 |
Subordinated debentures | 34,635 |  |  | 34,589 |
Total long-term debt | $ | 107,742 |  |  | $ | 107,895 |
The interest expense on long-term debt was $5.8 million, $6.6 million, and $6.4 million for the years ended December 31, 2016, 2015, and 2014, respectively. Junior Subordinated Debentures: The junior subordinated debentures are issued to various trust subsidiaries of the Company. These trusts are considered to be variable interest entities for which the Company is not the primary beneficiary, and therefore the accounts of the trusts are not included in the Company’s consolidated financial statements. These trusts were formed for the purpose of issuing trust preferred securities, which were then sold in a private placement offering. The proceeds from the sale of the securities and the issuance of common stock by these trusts were invested in these Junior Subordinated Debentures issued by the Company. For regulatory purposes, bank holding companies are allowed to include trust preferred securities in Tier 1 capital up to a certain limit. Provisions in the Dodd-Frank Act generally exclude trust preferred securities from Tier 1 capital, however, holding companies with consolidated assets of less than $15 billion, such as the Company, are able to continue to include these instruments in Tier 1 capital, but no such securities issued in the future will count as Tier 1 capital. Information relating to these trust preferred securities are as follows:
Trust |  | Description of Capital Securities
Capital Trust V |  | $50.0 million due in 2037, interest at a variable rate of 3 month LIBOR plus 1.48% (2.44% at December 31, 2016), which had previously been converted to a fixed rate of 6.52%, through the use of an interest rate swap which expired on December 28, 2016. Beginning on January 17, 2017, the borrowings will be subject to a forward starting interest rate swap, converting the interest to a fixed rate of 2.84% through December 15, 2021. These securities are callable quarterly, until maturity.
Slades Ferry Trust I |  | $10.0 million due in 2034, bearing interest at a variable rate of 3 month LIBOR plus 2.79% (3.78% at December 31, 2016). These securities are callable quarterly, until maturity.
Central Trust I |  | $5.1 million due in 2034, bearing interest at a variable rate of 3 month LIBOR plus 2.44% (3.40% at December 31, 2016). These securities are callable quarterly, until maturity.
Central Trust II |  | $5.9 million due in 2037, bearing a fixed interest rate of 7.015% until March 15, 2017. Subsequent to this date, the interest will be variable (3 month LIBOR plus 1.65%) and the securities will become callable quarterly, until maturity.
All obligations under these trust preferred securities are unconditionally guaranteed by the Company. Subordinated Debentures: In the first quarter of 2015, the Bank redeemed $30.0 million of subordinated debt that had an original maturity of October 1, 2019, without penalty. The interest rate at the time of redemption was floating rate of LIBOR plus 3.00%. The subordinated debentures were issued to USB Capital Resources, Inc., a wholly-owned subsidiary of U.S. Bank National Association. At December 31, 2016 and 2015 there was $35.0 million of outstanding subordinated debentures at the bank holding company. The subordinated debentures were issued to several investors via private placement on November 17, 2014. The subordinated debt matures on November 15, 2024, however with regulatory approval, the Bank may redeem the subordinated debt without penalty at any scheduled payment date on or after November 15, 2019 with 30 days notice. The interest rate is fixed at 4.75% through November 15, 2019, after which it converts to LIBOR plus 2.98%. The following table sets forth the contractual maturities of long-term debt over the next five years:
|  | 2017 |  | 2018 |  | 2019 |  | 2020 |  | 2021 |  | Thereafter |  | Total
|  | (Dollars in thousands)
Junior subordinated debentures |  |  |  |  |  |  |  |  |  |  |  |  |  |
Capital trust V |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 51,547 |  |  | $ | 51,547 |
Slades ferry trust I |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 10,310 |  |  | $ | 10,310 |
Central trust I |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 5,258 |  |  | $ | 5,258 |
Central trust II |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 6,083 |  |  | $ | 6,083 |
Subordinated debentures |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 35,000 |  |  | $ | 35,000 |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6928386&loc=d3e21475-112644 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.19,20,22) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 + Details
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