Note 7 – Borrowings

The following table is a summary of borrowings as of September 30, 2016, and December 31, 2015. Junior subordinated debentures are discussed in detail in Note 8:


	September 30, 2016		December 31, 2015
Securities sold under repurchase agreements	$	46,606	$	34,070
FHLBC advances1		-		15,000
Junior subordinated debentures		57,579		57,543
Subordinated debt		45,000		45,000
Notes payable and other borrowings		500		500
Total borrowings	$	149,685	$	152,113

1 Included in other short-term borrowings on the balance sheet.

The Company enters into deposit sweep transactions where the transaction amounts are secured by pledged securities. These transactions consistently mature overnight 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 $46.6 million at September 30, 2016, and $34.1 million at December 31, 2015. The fair value of the pledged collateral was $47.6 million at September 30, 2016 and $45.4 million at December 31, 2015. At September 30, 2016, there was one customer with secured balances exceeding 10% of stockholders’ equity.

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 September 30, 2016, the Bank had no advances outstanding under the FHLBC as compared to $15 million outstanding as of December 31, 2015. As of September 30, 2016, FHLBC stock held was valued at $3.2 million, and any potential FHLBC advances were collateralized by securities with a fair value of $65.4 million and loans with a principal balance of $176.4 million, which carried a FHLBC calculated combined collateral value of $178.6 million. The Company had excess collateral of $142.3 million available to secure borrowings at September 30, 2016.

One of the Company’s most significant borrowing relationships continued to be the $45.5 million credit facility with a correspondent bank. That credit began in January 2008 and was originally composed of a $30.5 million senior debt facility, which included $500,000 in term debt, and $45.0 million of subordinated debt. The subordinated debt and the term debt portion of the senior debt facility mature on March 31, 2018. The interest rate on the senior debt facility resets quarterly and at the Company’s option, is based on either 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 no principal outstanding balance on the senior line of credit portion of the senior debt facility when it matured and was terminated. The Company had $500,000 in principal outstanding in term debt and $45.0 million in principal outstanding in subordinated debt at both September 30, 2016, and December 31, 2015. 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 September 30, 2016, and December 31, 2015, the Company was in compliance with all covenants contained within the credit agreement.