Note 9: Borrowings

The following table is a summary of borrowings as of December 31, 2015, and December 31, 2014. Junior subordinated debentures are discussed in detail in Note 10:


	2015		2014
Securities sold under repurchase agreements	$	34,070	$	21,036
FHLBC advances1		15,000		45,000
Junior subordinated debentures		58,378		58,378
Subordinated debt		45,000		45,000
Notes payable and other borrowings		500		500
	$	152,948	$	169,914

Included in other short-term borrowing on the balance sheet.

The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature within 1 to 90 days from the transaction date and are governed by sweep repurchase agreements. All sweep repurchase agreements are treated as financings secured by U.S. government agencies and collateralized mortgage-backed securities and had a carrying amount of $34.1 million at December 31, 2015, and $21.0 million at December 31, 2014. The fair value of the pledged collateral was $45.4 million and $43.4 million at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015, there were no customers with secured balances exceeding 10% of stockholders’ equity.

The following table is a summary of additional information related to repurchase agreements:


	2015			2014			2013
Average daily balance during the year	$	28,194		$	26,093		$	23,313
Average interest rate during the year		0.01	%		0.01	%		0.01	%
Maximum month-end balance during the year	$	34,785		$	38,133		$	30,510
Weighted average interest rate at year-end		0.01	%		0.01	%		0.01	%

The Company’s borrowings at the FHLBC require the Bank to be a member and invest in the stock of the FHLBC. Total borrowings are generally limited to the lower of 35% of total assets or 60% of the book value of certain mortgage loans. As of December 31, 2015, the Bank had taken an advance of $15.0 million at 0.16% interest on the FHLBC stock valued at $3.7 million, collateralized securities with a fair value of $98.8 million and loans with a principal balance of $169.7 million, which carry a combined collateral value of $190.7 million. The Company has excess collateral of $174.4 million available to secure borrowings.

One of the Company’s most significant borrowing relationships continued to be the $45.5 million credit facility with a correspondent bank. That credit is composed of $500,000 in senior term debt, and $45.0 million of subordinated debt. The subordinated debt and the senior term debt mature on March 31, 2018. The interest rate on the senior debt resets quarterly and at the Company’s option, is based on, the lender’s prime rate or three-month LIBOR plus 90 basis points. The interest rate on the subordinated debt resets quarterly, and is equal to three-month LIBOR plus 150 basis points. The Company had $500,000 in principal outstanding in senior term debt and $45.0 million in principal outstanding in subordinated debt at the end of both December 31, 2015, and December 31, 2014. The term debt is secured by all of the outstanding capital stock of the Bank. The Company has made all required interest payments on the outstanding principal balance on a timely basis.

The credit facility agreement contains usual and customary provisions regarding acceleration of the senior debt upon the occurrence of an event of default by the Company under the senior debt agreement. The senior debt agreement also contains certain customary representations and warranties, and financial covenants. At December 31, 2015, the Company was in compliance with all covenants contained within the credit agreement supporting the $45.5 million credit facility with a correspondent bank. The agreement provides that noncompliance is an event of default and as the result of the Company’s failure to comply with a financial covenant, the lender may (i) terminate all commitments to extend further credit, (ii) increase the interest rate on the revolving line of the term debt by 200 basis points, (iii) declare the senior debt immediately due and payable and (iv) exercise all of its rights and remedies at law, in equity and/or pursuant to any or all collateral documents, including foreclosing on the collateral. The total outstanding principal in senior debt is the $500,000 in term debt. Because the subordinated debt is treated as Tier 2 capital for regulatory capital purposes, the senior debt agreement does not provide the lender with any rights of acceleration or other remedies with regard to the subordinated debt upon an event of default caused by the Company’s failure to comply with a financial covenant.

Scheduled maturities and weighted average rates of borrowings for the years ended December 31 were as follows:


	2015				2014
			Weighted				Weighted
			Average				Average
	Balance		Rate		Balance		Rate
2015		N/A	N/A		$	66,036	0.09	%
2016	$	49,070	0.06	%		-	-
2017		-	-			-	-
2018		45,500	1.82	%		45,500	1.75	%
2019		-	-			-	-
2020		-	-			-	-
Thereafter		58,378	7.35	%		58,378	7.35	%
Total	$	152,948	3.37	%	$	169,914	3.03	%