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Repurchase Agreements and Other Borrowings | 12 Months Ended
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Dec. 31, 2020
Repurchase Agreements And Other Borrowings [Abstract] |
Repurchase Agreements and Other Borrowings | Note 9 -- Repurchase Agreements and Other Borrowings As of December 31, 2020 and 2019 borrowings consisted of the following (in thousands):
|  | 2020 |  |  | 2019 |
Securities sold under agreements to repurchase |  | $ | 206,937 |  |  | $ | 208,109 |
Federal Home Loan Bank (FHLB) Fixed-term advances |  |  | 93,969 |  |  |  | 113,895 |
Subordinated debt |  |  | 94,253 |  |  |  | — |
Junior subordinated debentures |  |  | 19,027 |  |  |  | 18,858 |
Other borrowings: |  |  |  |  |  |  |  |
Federal funds purchased |  |  | — |  |  |  | 5,000 |
Due after one year |  |  | — |  |  |  | — |
Total |  | $ | 414,186 |  |  | $ | 345,862 |
Aggregate annual maturities of FHLB advances and debt (excluding unamortized discounts and premiums) at December 31, 2020 are (in thousands):
|  |  |  |  |  | Subordinated |  |  | Jr. Subordinated |
|  | FHLB |  |  | Debt |  |  | Debentures |
2021 |  | $ | 19,000 |  |  | $ | — |  |  | $ | — |
2022 |  |  | 5,000 |  |  |  | — |  |  |  | — |
2023 |  |  | 15,000 |  |  |  | — |  |  |  | — |
2024 |  |  | 10,000 |  |  |  | — |  |  |  | — |
2025 |  |  | 5,000 |  |  |  | — |  |  |  | — |
Thereafter |  |  | 40,000 |  |  |  | 96,000 |  |  |  | 20,620 |
|  |  | 94,000 |  |  |  | 96,000 |  |  |  | 20,620 |
Unamortized discount |  |  | (31 | ) |  |  | (1,747 | ) |  |  | (1,593 | )
|  | $ | 93,969 |  |  | $ | 94,253 |  |  | $ | 19,027 |
FHLB advances represent borrowings by First Mid Bank to fund loan demand. At December 31, 2020 the advances totaling $94 million were as follows:
Advance |  |  | Term (in years) |  |  | Interest Rate |  |  | Maturity Date
$ | 5,000,000 |  |  |  | 3.5 |  |  | 1.83% |  |  | February 1, 2021
| 5,000,000 |  |  |  | 5.0 |  |  | 1.85% |  |  | April 12, 2021
| 4,000,000 |  |  |  | 1.0 |  |  | 2.00% |  |  | May 3, 2021
| 5,000,000 |  |  |  | 7.0 |  |  | 2.55% |  |  | October 1, 2021
| 5,000,000 |  |  |  | 5.0 |  |  | 2.71% |  |  | March 21, 2022
| 5,000,000 |  |  |  | 8.0 |  |  | 2.40% |  |  | January 9, 2023
| 5,000,000 |  |  |  | 3.5 |  |  | 1.51% |  |  | July 31, 2023
| 5,000,000 |  |  |  | 3.5 |  |  | 0.77% |  |  | September 11, 2023
| 10,000,000 |  |  |  | 5.0 |  |  | 1.45% |  |  | December 31, 2024
| 5,000,000 |  |  |  | 5.0 |  |  | 0.91% |  |  | March 10, 2025
| 5,000,000 |  |  |  | 10.0 |  |  | 1.14% |  |  | October 3, 2029
| 5,000,000 |  |  |  | 10.0 |  |  | 1.15% |  |  | October 3, 2029
| 5,000,000 |  |  |  | 10.0 |  |  | 1.12% |  |  | October 3, 2029
| 10,000,000 |  |  |  | 10.0 |  |  | 1.39% |  |  | December 31, 2029
| 15,000,000 |  |  |  | 10.0 |  |  | 1.41% |  |  | December 31, 2029
Securities sold under agreements to repurchase were $206.9 million at December 31, 2020, a decrease of $1.2 million from $208.1 million at December 31, 2019 primarily due to seasonal cash needs of customers. Securities sold under agreements to repurchase have overnight maturities and a weighted average rate of .16%.
(in thousands) |  | 2020 |  |  | 2019 |  |  | 2018 |
Securities sold under agreements to repurchase: |  |  |  |  |  |  |  |  |  |  |  |
Maximum outstanding at any month-end |  | $ | 350,288 |  |  | $ | 208,109 |  |  | $ | 192,330 |
Average amount outstanding for the year |  |  | 219,298 |  |  |  | 169,437 |  |  |  | 140,622 |
The right of setoff for a repurchase agreement resembles a secured borrowing, whereby the collateral pledged by the Company would be used to settle the fair value of the repurchase agreement should the Company be in default (e.g., declare bankruptcy), the Company could cancel the repurchase agreement (i.e., cease payment of principal and interest), and attempt collection on the amount of collateral value in excess of the repurchase agreement fair value. The collateral is held by a third party financial institution in the counterparty's custodial account. The counterparty has the right to sell or repledge the investment securities. For government entity repurchase agreements, the collateral is held by the Company in a segregated custodial account under a tri- party agreement. The Company is required by the counterparty to maintain adequate collateral levels. In the event the collateral fair value falls below stipulated levels, the Company will pledge additional securities. The Company closely monitors collateral levels to ensure adequate levels are maintained, while mitigating the potential of over-collateralization in the event of counterparty default. Repurchase agreements by class of collateral pledged are as follows (in thousands):
|  | December 31, 2020 |  |  | December 31, 2019 |
US Treasury securities and obligations of U.S. government corporations & agencies |  | $ | 37,423 |  |  | $ | 77,333 |
Obligations of states and political subdivisions |  |  | — |  |  |  | 2,375 |
Mortgage-backed securities: GSE: residential |  |  | 168,480 |  |  |  | 128,401 |
Miscellaneous |  |  | 1,034 |  |  |  | — |
Total |  | $ | 206,937 |  |  | $ | 208,109 |
At December 31, 2020, there was no outstanding loan balance on the revolving credit agreement with The Northern Trust Company. This loan was renewed on April 10, 2020 for one year as a revolving credit agreement with a maximum available balance of $15 million. The interest rate is floating at 2.25% over the federal funds rate. The loan is secured by all the stock of First Mid Bank. Management believes that the Company and its subsidiary banks were in compliance with all the existing covenants at December 31, 2020 and 2019. On October 6, 2020, the Company issued and sold $96.0 million in aggregate principal amount of its 3.95% Fixed-to-Floating Rate Subordinated Notes due 2030 (the “Notes”). The Notes were issued pursuant to the Indenture, dated as of October 6, 2020 (the “Base Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of October 6, 2020 (the “Supplemental Indenture”), between the Company and the Trustee. The Base Indenture, as amended and supplemented by the Supplemental Indenture, governs the terms of the Notes and provides that the Notes are unsecured, subordinated debt obligations of the Company and will mature on October 15, 2030. From and including the date of issuance to, but excluding October 15, 2025, the Notes will bear interest at an initial rate of 3.95% per annum. From and including October 15, 2025 to, but excluding the maturity date or earlier redemption, the Notes will bear interest at a floating rate equal to three-month Term SOFR plus a spread of 383 basis points, or such other rate as determined pursuant to the Supplemental Indenture, provided that in no event shall the applicable floating interest rate be less than zero per annum. The Company may, beginning with the interest payment date of October 15, 2025, and on any interest payment date thereafter, redeem the Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem the Notes at any time, including prior to October 15, 2025, at the Company’s option, in whole but not in part, if: (i) a change or prospective change in law occurs that could prevent the Company from deducting interest payable on the Notes for U.S. federal income tax purposes; (ii) a subsequent event occurs that could preclude the Notes from being recognized as Tier 2 capital for regulatory capital purposes; or (iii) the Company is required to register as an investment company under the Investment Company Act of 1940, as amended; in each case, at a redemption price equal to 100% of the principal amount of the Notes plus any accrued and unpaid interest to but excluding the redemption date. The Company had approximately $1.8 million of costs, including a debt issuance discount of $1.4 million, in connection with the debt issuance. This expense is being amortized to interest expense over the life of the notes. At December 31, 2020, the recorded balance of subordinated notes was $94,253,000. On February 27, 2004, the Company completed the issuance and sale of $10 million of floating rate trust preferred securities through Trust I, a statutory business trust and wholly-owned unconsolidated subsidiary of the Company, as part of a pooled offering. On October 7, 2019, these trust preferred securities were redeemed, along with $310,000 in common securities issued by Trust I and held by the Company, as a result of the concurrent redemption of 100% of he Company's junior subordinated debentures due 2034 and held by Trust I, which supported the trust preferred securities. The redemption price for the junior subordinated debentures was equal to 100% of the principal amount plus accrued interest, if any, up to, but not including, the redemption date of October 7, 2019. The proceeds from the redemption of the junior subordinated debentures were simultaneously applied to redeem all of the outstanding common securities and the outstanding trust preferred securities at a price of 100% of the aggregate liquidation amount of the trust preferred securities plus accumulated but unpaid distributions up to but not including the redemption date. The redemption was made pursuant to the optional redemption provision of the underlying indenture. On April 26, 2006, the Company completed the issuance and sale of $10 million of fixed/floating rate trust preferred securities through Trust II, a statutory business trust and wholly-owned unconsolidated subsidiary of the Company, as part of a pooled offering. The Company established Trust II for the purpose of issuing the trust preferred securities. The $10 million in proceeds from the trust preferred issuance and an additional $310,000 for the Company’s investment in common equity of Trust II, a total of $10,310,000, was invested in junior subordinated debentures of the Company. The underlying junior subordinated debentures issued by the Company to Trust II mature in 2036, bore interest at a fixed rate of 6.98% paid quarterly until June 15, 2011 and then converted to floating rate (LIBOR plus 160 basis points) after June 15, 2011 (1.82% and 3.49% at December 31, 2020 and 2019). The net proceeds to the Company were used for general corporate purposes, including the Company’s acquisition of Mansfield. On September 8, 2016, the Company assumed the trust preferred securities of Clover Leaf Statutory Trust I (“CLST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First Clover Financial. The $4 million of trust preferred securities and an additional $124,000 additional investment in common equity of CLST I, is invested in junior subordinated debentures issued to CLST I. The subordinated debentures mature in 2025, bear interest at three-month LIBOR plus 185 basis points (2.07% and 3.74% at December 31, 2020 and 2019, respectively) and resets quarterly. On May 1, 2018, the Company assumed the trust preferred securities of FBTC Statutory Trust I (“FBTCST I”), a statutory business trust that was a wholly owned unconsolidated subsidiary of First BancTrust Corporation. The $6 million of trust preferred securities and an additional $186,000 additional investment in common equity of FBTCST I is invested in junior subordinated debentures issued to FBTCST I. The subordinated debentures mature in 2035, bear interest at three-month LIBOR plus 170 basis points (1.92% and 3.59% at December 31, 2020 and 2019, respectively) and resets quarterly. The trust preferred securities issued by Trust II, CLST I, and FBTCSTI are included as Tier 1 capital of the Company for regulatory capital purposes. On March 1, 2005, the Federal Reserve Board adopted a final rule that allows the continued limited inclusion of trust preferred securities in the calculation of Tier 1 capital for regulatory purposes. The final rule provided a five-year transition period, ending September 30, 2010, for application of the revised quantitative limits. On March 17, 2009, the Federal Reserve Board adopted an additional final rule that delayed the effective date of the new limits on inclusion of trust preferred securities in the calculation of Tier 1 capital until March 31, 2012. The application of the revised quantitative limits did not and is not expected to have a significant impact on its calculation of Tier 1 capital for regulatory purposes or its classification as well-capitalized. The Dodd-Frank Act, signed into law July 21, 2010, removes trust preferred securities as a permitted component of a holding company’s Tier 1 capital after a three-year phase-in period beginning January 1, 2013 for larger holding companies. For holding companies with less than $15 billion in consolidated assets, existing issues of trust preferred securities are grandfathered and not subject to this new restriction. Similarly, the final rule implementing the Basel III reforms allows holding companies with less than $15 billion in consolidated assets as of December 31, 2009 to continue to count toward Tier 1 capital any trust preferred securities issued before May 19, 2010. New issuances of trust preferred securities, however would not count as Tier 1 regulatory capital. In addition to requirements of the Dodd-Frank Act discussed above, the act also required the federal banking agencies to adopt rules that prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring certain unregistered investment companies (defined as hedge funds and private equity funds). This rule is generally referred to as the “Volcker Rule.” On December 10, 2013, the federal banking agencies issued final rules to implement the prohibitions required by the Volcker Rule. Following the publication of the final rule, and in reaction to concerns in the banking industry regarding the adverse impact the final rule’s treatment of certain collateralized debt instruments has on community banks, the federal banking agencies approved an interim final rule to permit banking entities to retain interests in certain collateralized debt obligations backed primarily by trust preferred securities. Under the interim final rule, the agencies permit the retention of an interest in or sponsorship of covered funds by banking entities under $15 billion in assets if (1) the collateralized debt obligation was established and issued prior to May 19, 2010, (2) the banking entity reasonably believes that the offering proceeds received by the collateralized debt obligation were invested primarily in qualifying trust preferred collateral, and (3) the banking entity’s interests in the collateralized debt obligation was acquired on or prior to December 10, 2013. Although the Volcker Rule impacts many large banking entities, the Company does not currently anticipate that the Volcker Rule will have a material effect on the operations of the Company or First Mid Bank.

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- Definition Repurchase Agreements And Other Borrowings. + References No definition available. + Details
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- Definition Disclosure of change in repurchase agreements, FHLB Advances and other borrowings. + References No definition available. + Details
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