XML 27 R17.htm IDEA: XBRL DOCUMENT v3.22.2.2
BORROWINGS
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
BORROWINGS BORROWINGS
Short-term borrowings on the Consolidated Balance Sheets include repurchase agreements utilized for corporate sweep accounts with cash management account agreements in place, federal funds purchased, overnight advances from the FHLB and a short-term line of credit.

All repurchase agreements are subject to terms and conditions agreed to by 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. As of September 30, 2022, the Bank had no securities sold under agreements to repurchase. At December 31, 2021, the Bank had $51.3 million of securities sold under agreements to repurchase.

First Financial had $3.5 million federal funds purchased at September 30, 2022 and none at December 31, 2021. The Company had $972.6 million in short-term borrowings with the FHLB at September 30, 2022 and $225.0 million at December 31, 2021. These short-term borrowings are used to manage normal liquidity needs and support the Company's asset and liability
management strategies. Additionally, at September 30, 2022, other short-term borrowings included $184.9 million of collateral owed by counterparty banks to First Financial.

First Financial also has a $40.0 million short-term credit facility with an unaffiliated bank that matures in December, 2022, which is considered a short-term borrowing. This facility has a variable 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 September 30, 2022, First Financial had no outstanding balance, and at December 31, 2021, First Financial had an outstanding balance of $20.0 million. 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 both September 30, 2022 and December 31, 2021. This credit facility also required First Financial to pledge as collateral the Bank's common stock where the lender is granted a security interest in this collateral.

The following is a summary of First Financial's short-term borrowings:

(Dollars in thousands)September 30, 2022December 31, 2021
Federal funds purchased and securities sold under agreements to repurchase$3,535 $51,203 
FHLB short-term borrowings972,600 225,000 
Other short-term borrowings184,912 20,000 
Total short-term borrowings$1,161,047 $296,203 

First Financial had $355.1 million and $409.8 million of long-term debt as of September 30, 2022 and December 31, 2021 respectively, which included subordinated notes, capital lease liabilities and an interest free loan with a municipality.

The following is a summary of First Financial's long-term debt:
 September 30, 2022December 31, 2021
(Dollars in thousands)AmountAverage rateAmountAverage rate
Subordinated notes$313,591 5.29 %$313,248 4.86 %
Unamortized debt issuance costs(2,095)N/A(2,384)N/A
Capital lease liability1,719 3.82 %1,781 3.81 %
Capital loan with municipality775 0.00 %775 0.00 %
Subtotal313,990 5.30 %313,420 4.88 %
Acquired in Summit acquisition
Bank lines of credit0 0.00 %23,030 2.77 %
Notes issued in conjunction with acquisition of property and equipment41,126 4.46 %73,382 4.09 %
Total notes payable acquired in Summit acquisition41,126 4.46 %96,412 3.77 %
Total long-term debt$355,116 5.20 %$409,832 4.62 %

In April 2020, First Financial issued $150.0 million of fixed to floating rate subordinated notes. These subordinated notes have an initial fixed interest rate of 5.25% to, but excluding, May 15, 2025, payable semi-annually in arrears. From, and including, May 15, 2025, the interest rate on the subordinated notes will reset quarterly to a floating rate per annum equal to a benchmark rate, which is expected to be the then-current three-month term SOFR, plus 509 basis points, payable quarterly in arrears. The subordinated notes mature on May 15, 2030. These notes are redeemable by the Company in whole or in part beginning with the interest payment date of May 15, 2025.

In 2015, First Financial issued $120.0 million of subordinated notes, which have a fixed interest rate of 5.13% payable semiannually and mature in August 2025. These notes are not redeemable by the Company, or callable by the holders of the notes prior to maturity. In addition, First Financial acquired $49.5 million of variable rate subordinated notes in the MSFG merger that were issued to previously formed trusts in exchange for the trust proceeds. These notes were recorded at fair value at the date of the MSFG merger and the Consolidated Balance Sheets include $43.6 million and $43.2 million for these notes at September 30, 2022 and December 31, 2021, respectively. 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. These
acquired subordinated notes mature 30 years after the date of original issuance and may be called at par following the 5 year anniversary of issuance. The subordinated notes are treated as Tier 2 capital for regulatory capital purposes and are included in Long-term debt on the Consolidated Balance Sheets.

Additionally, in conjunction with the acquisition of Summit, First Financial assumed $96.4 million in outstanding long-term borrowings at December 31, 2021. These outstanding long-term borrowings consisted of $23.0 million of lines of credit with other banks utilized to operate the business and carried an average interest rate of 2.77%. These lines of credit were paid off in January 2022. Acquired long-term borrowings also included $41.1 million and $73.4 million of term notes, both with and without recourse, with an average interest rate of 4.46% and 4.09% at September 30, 2022 and December 31, 2021, respectively. These term notes were used to finance Summit's equity investment in the purchase of equipment to be leased to customers.