SHORT-TERM AND LONG-TERM BORROWINGS

12 Months Ended

Sep. 30, 2020

Short-Term Borrowings


September 30,	2020		2019
(Dollars in Thousands)
Overnight federal funds purchased	$	—	$	642,000

Repurchase agreements	—		4,019

Total	$	—	$	646,019

The Company had no overnight federal funds purchased from the FHLB or from other financial institutions at September 30, 2020, as compared to $477.0 million of overnight federal funds purchased from the FHLB and $165.0 million from other financial institutions at September 30, 2019. At September 30, 2020 and 2019, the Company had no short-term advances from the FHLB.

The Bank has executed blanket pledge agreements whereby the Bank assigns, transfers, and pledges to the FHLB and grants to the FHLB a security interest in real estate and securities collateral. The Bank has the right to use, commingle, and dispose of the collateral it has assigned to the FHLB. Under the agreement, the Bank must maintain “eligible collateral” that has a “lending value” at least equal to the “required collateral amount,” all as defined by the agreement.

At fiscal year-end 2020 and 2019, the Bank pledged securities with fair values of approximately $673.8 million and $812.2 million, respectively, to be used against FHLB advances as needed. In addition, qualifying real estate loans of approximately $333.8 million, and $928.8 million were pledged as collateral at September 30, 2020, and 2019, respectively.

The company had no securities sold under agreements to repurchase at September 30, 2020 and $4.0 million at September 30, 2019.

An analysis of securities sold under agreements to repurchase at September 30, 2020 and 2019 follows:


September 30,	2020			2019
(Dollars in Thousands)
Highest month-end balance	$	2,550		$	4,306
Average balance	328			3,542
Weighted average interest rate for the fiscal year	2.00		%	2.67		%
Weighted average interest rate at fiscal year end	—		%	2.41		%

As of September 30, 2020, the Company did not have any securities pledged as collateral for securities sold under agreements to repurchase. There were $4.9 million of securities pledged as collateral for securities sold under agreements to repurchase at September 30, 2019.

The Bank has a line of credit with another financial institution for $25.0 million as of September 30, 2020. This line of credit has no fee, and, as of September 30, 2020, the Bank had not drawn on it.

Long-Term Borrowings


September 30,	2020		2019
(Dollars in Thousands)
Long-term FHLB advances	$	—	$	110,000
Trust preferred securities	13,661		13,661
Subordinated debentures (net of issuance costs)	73,807		73,644

Other long-term borrowings (1)	10,756		18,533
Total	$	98,224	$	215,838

(1) Includes $10.6 million of discounted leases and $0.1 million of capital lease obligations at September 30, 2020.

Management extinguished its remaining long-term FHLB advances in the fiscal 2020 fourth quarter. Prior to doing so, the advances had an outstanding balance of $110.0 million at a weighted average cost of 2.41%. The early extinguishment resulted in a pre-tax charge of $1.7 million to other expense in the fiscal 2020 fourth quarter.

At September 30, 2020, the scheduled maturities of the Company's long-term borrowings were as follows for the fiscal years ending:


September 30,	Long-term FHLB advances		Trust preferred securities		Subordinated debentures		Other long-term borrowings		Total
(Dollars in Thousands)
2021	$	—	$	—	$	—	$	5,442	$	5,442
2022	—		—		—		2,735		2,735
2023	—		—		—		1,853		1,853
2024	—		—		—		726		726
2025	—		—		—		—		—
Thereafter	—		13,661		73,807		—		87,468
Total long-term borrowings	$	—	$	13,661	$	73,807	$	10,756	$	98,224

Certain trust preferred securities are due to First Midwest Financial Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The securities were issued in 2001 in conjunction with the Trust’s issuance of 10,000 shares of Trust Preferred Securities. The securities bear the same interest rate and terms as the trust preferred securities. The securities are included on the Consolidated Statements of Financial Condition as liabilities.

The Company issued all of the 10,310 authorized shares of trust preferred securities of First Midwest Financial Capital Trust I holding solely securities. Distributions are paid semi-annually. Cumulative cash distributions are calculated at a variable rate of LIBOR plus 3.75% (4.01% at September 30, 2020, and 5.81% at September 30, 2019), not to exceed 12.5%. The Company may, at one or more times, defer interest payments on the capital securities for up to 10 consecutive semi-annual periods, but not beyond July 25, 2031. At the end of any deferral period, all accumulated and unpaid distributions are required to be paid. The capital securities are required to be redeemed on July 25, 2031; however, the Company has a semi-annual option to shorten the maturity date. The redemption price is $1,000 per capital security plus any accrued and unpaid distributions to the date of redemption.

Holders of the capital securities have no voting rights, are unsecured and rank junior in priority of payment to all of the Company’s indebtedness and senior to the Company’s common stock.

Although the securities issued by the Trust are not included as a component of stockholders’ equity, the securities are treated as capital for regulatory purposes, subject to certain limitations.

Through the Crestmark Acquisition, the Company acquired $3.4 million in floating rate capital securities due to Crestmark Capital Trust I, a 100%-owned nonconsolidated subsidiary of the Company. The subordinated debentures bear interest at LIBOR plus 3.00%, have a stated maturity of 30 years and are redeemable by the Company at par, with regulatory approval. The interest rate is reset quarterly at distribution dates in February, May, August, and November. The interest rate as of September 30, 2020 was 3.23%. The Company has the option to defer interest payments on the subordinated debentures from time to time for a period not to exceed five consecutive years.

The Company completed the public offering of $75.0 million of 5.75% fixed-to-floating rate subordinated debentures during fiscal year 2016. These notes are due August 15, 2026. The subordinated debentures were sold at par, resulting in net proceeds of approximately $73.9 million. At September 30, 2020, the Company had $73.8 million in aggregate principal amount in subordinated debentures, net of issuance costs of $1.2 million.