BORROWED FUNDS

6 Months Ended

Jun. 30, 2019

Borrowed funds at June 30, 2019 and December 31, 2018 are summarized, as follows:



	June 30, 2019				December 31, 2018
			Weighted				Weighted
			Average				Average
(Dollars in thousands)	Principal		Rate		Principal		Rate
Short-term borrowings:
Advances from the FHLB	$	608,928	2.65	%	$	1,118,832	2.58	%
Total short-term borrowings:	608,928		2.65		1,118,832		2.58
Long-term borrowings:
Advances from the FHLB and other borrowings	295,886		2.36		309,466		2.17
Subordinated borrowings	74,143		7.00		74,054		7.00
Junior subordinated borrowing - Trust I	15,464		4.37		15,464		4.50
Junior subordinated borrowing - Trust II	7,320		4.11		—		—
Total long-term borrowings:	392,813		3.34		398,984		3.16
Total	$	1,001,741	2.92	%	$	1,517,816	2.73	%

Short-term debt includes Federal Home Loan Bank (“FHLB”) advances with an original maturity of less than one year and a short-term line-of-credit drawdown through a correspondent bank. The Bank also maintains a $3.0 million secured line of credit with the FHLB that bears a daily adjustable rate calculated by the FHLB. There was no outstanding balance on the FHLB line of credit for the periods ended June 30, 2019 and December 31, 2018.

The Bank is approved to borrow on a short-term basis from the Federal Reserve Bank of Boston as a non-member bank. The Bank has pledged certain loans and securities to the Federal Reserve Bank to support this arrangement. No borrowings with the Federal Reserve Bank took place for the periods ended June 30, 2019 and December 31, 2018.

Long-term FHLB advances consist of advances with an original maturity of more than one year and are subject to prepayment penalties. The advances outstanding at June 30, 2019 include callable advances totaling $10 million and amortizing advances totaling $4.5 million. The advances outstanding at December 31, 2018 include no callable advances and amortizing advances totaling $1.4 million. All FHLB borrowings, including the line of credit, are secured by a blanket security agreement on certain qualified collateral, principally all residential first mortgage loans and certain securities.

A summary of maturities of FHLB advances as of June 30, 2019 is as follows:



	June 30, 2019
			Weighted Average
(In thousands, except rates)	Principal		Rate
Fixed rate advances maturing:
2019	$	640,219	2.59	%
2020	195,603		2.51
2021	31,476		2.49
2022	17,770		2.24
2023 and beyond	19,746		2.13
Total FHLB advances	$	904,814	2.55	%

The Company did not have variable-rate FHLB advances for the periods ended June 30, 2019 and December 31, 2018.

In September 2012, the Company issued fifteen year subordinated notes in the amount of $75.0 million at a discount of 1.15%. The interest rate is fixed at 6.875% for the first ten years. After ten years, the notes become callable and convert to an interest rate of three-month LIBOR rate plus 5.113%. The subordinated note includes reduction to the note principal balance of $399 thousand and $461 thousand for unamortized debt issuance costs as of June 30, 2019 and December 31 2018, respectively.

The Company holds 100% of the common stock of Berkshire Hills Capital Trust I (“Trust I”) which is included in other assets with a cost of $0.5 million. The sole asset of Trust I is $15.5 million of the Company’s junior subordinated debentures due in 2035. These debentures bear interest at a variable rate equal to LIBOR plus 1.85% and had a rate of 4.37% and 4.50% at June 30, 2019 and December 31, 2018, respectively. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust I is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust I is not consolidated into the Company’s financial statements.

The Company holds 100% of the common stock of SI Capital Trust II (“Trust II”) which is included in other assets with a cost of $0.2 million. The sole asset of Trust II is $8.2 million of the Company’s junior subordinated debentures due in 2036. These debentures bear interest at a variable rate equal to LIBOR plus 1.70% and had a rate of 4.11% at June 30, 2019. The Company has the right to defer payments of interest for up to five years on the debentures at any time, or from time to time, with certain limitations, including a restriction on the payment of dividends to shareholders while such interest payments on the debentures have been deferred. The Company has not exercised this right to defer payments. The Company has the right to redeem the debentures at par value. Trust II is considered a variable interest entity for which the Company is not the primary beneficiary. Accordingly, Trust II is not consolidated into the Company’s financial statements.