BORROWED FUNDS

12 Months Ended

Dec. 31, 2019

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



	2019				2018
(in thousands, except rates)	Principal		Weighted Average Rate		Principal		Weighted Average Rate
Short-term borrowings:
Advances from the FHLBB	$	125,000	2.06	%	$	1,118,832	2.58	%
Total short-term borrowings:	125,000		2.06		1,118,832		2.58
Long-term borrowings:
Advances from the FHLBB	605,501		2.16		309,466		2.17
Subordinated notes	74,232		7.00		74,054		7.00
Junior subordinated borrowing - Trust I	15,464		3.76		15,464		4.50
Junior subordinated borrowing - Trust II	7,353		3.59		—		—
Total long-term borrowings:	702,550		2.72		398,984		3.16
Total	$	827,550	2.62	%	$	1,517,816	2.73	%

Short-term debt includes Federal Home Loan Bank of Boston (“FHLBB”) advances with an original maturity of less than one year. At year-end 2019, the Company maintained a short-term line-of-credit through a correspondent bank with no balance outstanding. The Bank also maintains a $3.0 million secured line of credit with the FHLBB that bears a daily adjustable rate calculated by the FHLBB. There was no outstanding balance on the FHLBB line of credit for the periods ended December 31, 2019 and December 31, 2018. The Company is in compliance with all debt covenants as of December 31, 2019.

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 of Boston took place for the periods ended December 31, 2019 and December 31, 2018.

Long-term FHLBB advances consist of advances with an original maturity of more than one year and are subject to

prepayment penalties. The advances outstanding at December 31, 2019 include callable advances totaling $10 million and amortizing advances totaling $4.4 million. The advances outstanding at December 31, 2018 include no callable advances and amortizing advances totaling $1.7 million. All FHLBB 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 FHLBB advances at year-end 2019 is as follows:



	2019
(In thousands)	Amount		Weighted Average Rate
Fixed rate advances maturing:
2020	$	419,996	2.25	%
2021	231,476		2.00
2022	59,349		1.92
2023	11,924		2.23
2024 and beyond	7,756		1.82
Total FHLBB advances	$	730,501	2.14	%

The Company did not have variable-rate FHLB advances for the period ended December 31, 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 plus 5.113%. The subordinated note includes reduction to the note principal balance of $338 thousand and $461 thousand for unamortized debt issuance costs as of December 31, 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 3.76% and 4.50% at December 31, 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 on each quarterly payment date. 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 3.59% at December 31, 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.