BORROWINGS

6 Months Ended

Jun. 30, 2018

Short-term borrowings on the Consolidated Balance Sheets include repurchase agreements utilized for corporate sweep accounts with cash management account agreements in place, overnight advances from the FHLB and a short-term line of credit. All repurchase agreements are subject to terms and conditions of repurchase/security agreements between the Bank and the client. To secure its liability to the client, the Bank is authorized to sell or repurchase U.S. Treasury, government agency and mortgage-backed securities.

First Financial had $1.1 billion in short-term borrowings with the FHLB at June 30, 2018 and $742.3 million as of December 31, 2017. These short-term borrowings are used to manage normal liquidity needs and support the Company's asset and liability management strategies.

First Financial has a $15.0 million short-term credit facility with an unaffiliated bank that matured in July 2018, but is in the process of being extended. This facility can have a variable or fixed interest rate and provides First Financial additional liquidity, if needed, for various corporate activities including the repurchase of First Financial common stock and the payment of dividends to shareholders. As of June 30, 2018 and December 31, 2017, there was no outstanding balance. The credit agreement requires First Financial to comply with certain covenants including those related to asset quality and capital levels, and First Financial was in compliance with all covenants associated with this facility as of June 30, 2018 and December 31, 2017.

In conjunction with its merger with MSFG, First Financial acquired certain variable rate short-term borrowings with an unaffiliated bank. As of June 30, 2018, the balance outstanding was $8.3 million and the interest rate was 4.19%. This term debt is paid quarterly and matures in 2019.

First Financial had $469.4 million and $119.7 million of long-term debt as of June 30, 2018 and December 31, 2017, respectively, which included subordinated notes, FHLB long term advances and an interest free loan with a municipality.

The following is a summary of First Financial's long-term debt:



	June 30, 2018					December 31, 2017
(Dollars in thousands)	Amount			Average rate		Amount			Average rate
Subordinated notes	$	177,887		5.13	%	$	120,000		5.13	%
Unamortized discount and debt issuance costs	(8,819		)	N/A		(1,362		)	N/A
FHLB borrowings	299,580			1.90	%	241			1.09	%
Capital loan with municipality	775			0.00	%	775			0.00	%
Total long-term debt	$	469,423		3.16	%	$	119,654		5.14	%

In 2015, First Financial issued $120.0 million of subordinated notes, which have a fixed interest rate of 5.125% payable semiannually and mature on August 25, 2025. These notes are not redeemable by the Company, or callable by the holders of the notes prior to maturity. The subordinated notes are treated as Tier 2 capital for regulatory capital purposes. In addition, First Financial acquired, $49.5 million of variable rate subordinated notes in the MSFG merger that was issued to previously formed trusts in exchange for the trust proceeds. Interest on the acquired subordinated notes is payable quarterly, in arrears, and the Company has the option to defer interest payments for a period not to exceed 20 consecutive quarters. The acquired subordinated notes mature 30 years from issuance and may be called at par at any point following the 5 years anniversary of issuance. First Financial also acquired $8.4 million of 6.95% fixed rate private placement subordinated debt in conjunction with the MSFG merger that matures in 2025.

In addition to subordinated notes, long-term debt included $299.6 million and $0.2 million of fixed rate FHLB long-term advances as of June 30, 2018 and December 31, 2017, respectively. As of June 30, 2018, these long-term advances had a weighted average interest rate of 1.90%. These instruments are primarily utilized to reduce overnight liquidity risk and to mitigate interest rate sensitivity on the Consolidated Balance Sheets.