Note

–

Borrowings

Information relating to short-term and long-term borrowings is as follows for the years ended

December

31:

	2016					2015					2014
(dollars in thousands)	Amount		Rate			Amount		Rate			Amount		Rate
Short-term:
At Year-End:
Customer repurchase agreements and federal funds purchased	$	68,876		0.35	%	$	72,356		0.23	%	$	61,120		0.25	%
Federal Home Loan Bank – current portion		-					-		-			100,000		0.38	%
Total	$	68,876				$	72,356				$	161,120

Average Daily Balance:
Customer repurchase agreements and federal funds purchased	$	77,833		0.21	%	$	59,141		0.22	%	$	63,490		0.23	%
Federal Home Loan Bank – current portion		29,376		2.45	%		27,659		0.31	%		7,288		0.42	%
Total	$	107,209				$	86,800				$	70,778

Maximum Month-end Balance:
Customer repurchase agreements and federal funds purchased	$	136,689		0.16	%	$	73,696		0.21	%	$	80,471		0.28	%
Federal Home Loan Bank – current portion		100,000		0.94	%		140,000		0.20	%		100,000		0.38	%
Total	$	236,689				$	213,696				$	180,471

Long-term:
At Year-End:
Federal Home Loan Bank	$	0		-		$	0		-		$	40,000		2.62	%
Subordinated Notes		220,000		5.42	%		70,000		5.75	%		79,300		6.40	%
United Bank Line of Credit		-		-			-		-			-		-
Total	$	220,000				$	70,000				$	119,300

Average Daily Balance:
Federal Home Loan Bank	$	0		-		$	8,329		2.25	%	$	39,205		2.00	%
Subordinated Notes		135,164		5.54	%		74,117		6.06	%		37,875		6.59	%
United Bank Line of Credit		-		-			-		-			-		-
Total	$	135,164				$	82,446				$	77,080

Maximum Month-end Balance:
Federal Home Loan Bank	$	0		-		$	40,000		0.37	%	$	122,500		0.68	%
Subordinated Notes		220,000		5.42	%		79,300		6.52	%		79,300		6.52	%
United Bank Line of Credit		-		-			-		-			-		-
Total	$	220,000				$	119,300				$	201,800

The Company offers its business customers a repurchase agreement sweep account in which it collateralizes these funds with U.S. agency and mortgage backed securities segregated in its investment portfolio for this purpose. By entering into the agreement, the customer agrees to have the Bank repurchase the designated securities on the business day following the initial transaction in consideration of the payment of interest at the rate prevailing on the day of the transaction.

The Bank can purchase up to

$137.5

million in federal funds on an unsecured basis from its correspondents, against which there were no amounts outstanding at

December

31,

2016

and can borrow unsecured funds under

one

-way Certificates of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) brokered deposits in the amount of

$1.03

billion, against which there was

$19.9

million outstanding at

December

31,

2016.

The Bank also has a commitment at

December

31,

2016

from Promontory to place up to

$700.0

million of brokered deposits from its Insured Network Deposit (“

IND”) program with the Bank, with an actual balance of

$356.5

million outstanding at

December

31,

2016.

December

31,

2016,

the Bank was also eligible to make advances from the FHLB up to

$1.25

billion based on collateral at the FHLB, of which there were no amounts outstanding at

December

31,

2016.

The Bank

may

enter into repurchase agreements as well as obtain additional borrowing capabilities from the FHLB provided adequate collateral exists to secure these lending relationships. The Bank also has a back-up borrowing facility through the Discount Window at the Federal Reserve Bank of Richmond (“Federal Reserve Bank”). This facility, which amounts to approximately

$440.0

million, is collateralized with specific loan assets identified to the Federal Reserve Bank. It is anticipated that, except for periodic testing, this facility would be utilized for contingency funding only.

During

2016,

the Company renewed its Loan Agreement and related Stock Security Agreement and Promissory Note (the “credit facility”) with a regional bank, pursuant to which the Company

may

borrow, on a revolving basis, up to

$50.0

million for working capital purposes, or to finance capital contributions to the Bank in whole and to ECV in part. This facility was originally entered into in

August

2008

and has been renegotiated over the past

eight

years to its current terms. The credit facility is secured by a

first

lien on a portion of the stock of the Bank, and bears interest at a floating rate equal to the Wall Street Journal Prime Rate minus

0.25%

with a floor interest rate of

3.50%.

Interest is payable on a monthly basis. The term of the credit facility expires on

September

30,

2017.

There were

amounts outstanding under this credit at

December

31,

2016

December

31,

2015.

August

2014,

the Company completed the sale of

$70.0

million of its

5.75%

subordinated notes, due

September

2024

(the “Notes”). The Notes were offered to the public at par and qualify as Tier

capital for regulatory purposes to the fullest extent permitted under the Basel III Rule capital requirements. The net proceeds were approximately

$68.8

million, which includes

$1.2

million in deferred financing costs which is being amortized over the life of the Notes.

During

2015,

the Company redeemed the remaining balance of

$9.3

million of subordinated notes, due

2021.

During

March

2015,

the Company paid off its outstanding FHLB advances. A

$1.1

million loss on the early extinguishment of debt was recorded in

March

2015

due to the early payoff of FHLB advances. This decision was made in light of deposit growth in the quarter and expected benefits to the cost of funds going forward.

July

26,

2016,

the Company completed the sale of

$150.0

million of its

5.00%

Fixed-to-Floating Rate Subordinated Notes, due

August

2026

(the

“2026

Notes”). The Notes were offered to the public at par. The notes qualify as Tier

capital for regulatory purposes to the fullest extent permitted under the Basel III Rule capital requirements. The net proceeds were approximately

$147.35

million, which includes

$2.6

million in deferred financing costs which is being amortized over the life of the

2026

Notes.