v3.26.1
Borrowed Funds
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Borrowed Funds

7. Borrowed Funds

The components of the Company’s borrowed funds are as follows (in thousands):

 

 

 

June 30, 2026

 

 

December 31, 2025

 

Long-term debt:

 

 

 

 

 

 

Trust preferred securities

 

$

222,345

 

 

$

220,034

 

Subordinated notes 6.25%, net of issuance costs

 

 

109,468

 

 

 

109,255

 

Subordinated notes 2.75%

 

 

148,313

 

 

 

144,940

 

Total long-term debt

 

 

480,126

 

 

 

474,229

 

Total borrowed funds

 

$

480,126

 

 

$

474,229

 

 

The following table presents details of outstanding trust preferred securities as of June 30, 2026 (in thousands):

 

 

 

Amount Outstanding

 

 

Issuance Date

 

Interest Rate

 

Interest Rate as of June 30, 2026

 

 

Maturity Date

Marquette Capital Trust I

 

$

19,517

 

 

12/28/2005

 

1.33% over 3-month term SOFR

 

 

5.26

%

 

1/7/2036

Marquette Capital Trust II

 

 

19,974

 

 

12/28/2005

 

1.33% over 3-month term SOFR

 

 

5.26

%

 

1/7/2036

Marquette Capital Trust III

 

 

7,841

 

 

5/30/2006

 

1.50% over 3-month term SOFR

 

 

5.46

%

 

6/23/2036

Marquette Capital Trust IV

 

 

31,616

 

 

6/30/2006

 

1.60% over 3-month term SOFR

 

 

5.53

%

 

9/15/2036

Heartland Financial Statutory Trust IV

 

 

9,755

 

 

3/17/2004

 

2.75% over 3-month term SOFR

 

 

6.68

%

 

3/17/2034

Heartland Financial Statutory Trust V

 

 

17,717

 

 

1/27/2006

 

1.33% over 3-month term SOFR

 

 

5.26

%

 

4/7/2036

Heartland Financial Statutory Trust VI

 

 

17,153

 

 

6/21/2007

 

1.48% over 3-month term SOFR

 

 

5.41

%

 

9/15/2037

Heartland Financial Statutory Trust VII

 

 

15,008

 

 

6/26/2007

 

1.48% over 3-month term SOFR

 

 

5.40

%

 

9/1/2037

Morrill Statutory Trust I

 

 

10,054

 

 

12/19/2002

 

3.25% over 3-month term SOFR

 

 

7.26

%

 

12/26/2032

Morrill Statutory Trust II

 

 

9,819

 

 

12/17/2003

 

2.85% over 3-month term SOFR

 

 

6.78

%

 

12/17/2033

Sheboygan Statutory Trust I

 

 

7,411

 

 

9/17/2003

 

2.95% over 3-month term SOFR

 

 

6.88

%

 

9/17/2033

CBNM Capital Trust I

 

 

4,883

 

 

9/10/2004

 

3.25% over 3-month term SOFR

 

 

7.18

%

 

12/15/2034

Citywide Capital Trust III

 

 

6,861

 

 

12/19/2003

 

2.80% over 3-month term SOFR

 

 

6.73

%

 

12/19/2033

Citywide Capital Trust IV

 

 

4,749

 

 

9/30/2004

 

2.20% over 3-month term SOFR

 

 

6.10

%

 

9/30/2034

Citywide Capital Trust V

 

 

13,282

 

 

5/31/2006

 

1.54% over 3-month term SOFR

 

 

5.47

%

 

7/25/2036

OCGI Statutory Trust III

 

 

3,040

 

 

6/27/2002

 

3.65% over 3-month term SOFR

 

 

7.58

%

 

9/30/2032

OCGI Statutory Trust IV

 

 

5,722

 

 

9/23/2004

 

2.50% over 3-month term SOFR

 

 

6.43

%

 

12/15/2034

BVBC Capital Trust II

 

 

7,506

 

 

4/10/2003

 

3.25% over 3-month term SOFR

 

 

7.17

%

 

4/24/2033

BVBC Capital Trust III

 

 

10,437

 

 

7/29/2005

 

1.60% over 3-month term SOFR

 

 

5.59

%

 

9/30/2035

Total trust preferred securities

 

$

222,345

 

 

 

 

 

 

 

 

 

 

In September 2022, the Company issued $110.0 million of 6.25% fixed-to-fixed rate subordinated notes that mature on September 28, 2032. The notes bear interest at the rate of 6.25% per annum, payable semi-annually on each March 28 and September 28. The Company may redeem the notes, in whole or in part, on September 28, 2027, or on any interest payment date thereafter. Unamortized debt issuance costs related to these notes totaled $532 thousand and $745 thousand as of June 30, 2026 and December 31, 2025. Proceeds from the issuance of the notes were used for general corporate purposes, including contributing Tier 1 capital into the Bank.

As part of the acquisition of HTLF, the Company acquired $150.0 million of 2.75% fixed-to-fixed rate subordinated notes that mature on September 15, 2031. The notes bear interest at the rate of 2.75% per annum, payable semi-annually on each March 15 and September 15. The Company may redeem the notes, in whole or in part, on September 15, 2026, or on any interest payment date thereafter.

The remainder of the Company’s long-term debt was assumed from the acquisitions of Marquette Financial Companies in 2015 and HTLF in 2025 and consists of debt obligations payable to 19 unconsolidated trusts that previously issued trust preferred securities, as summarized in the table above. These long-term debt obligations had an aggregate contractual balance of $262.9 million and had a carrying value of $222.3 million and $220.0 million as of June 30, 2026 and December 31, 2026, respectively.

The Company is a member bank of the FHLB and through this relationship, the Company owns FHLB stock and has access to additional liquidity and funding sources through FHLB advances. The Company’s borrowing capacity is dependent upon the amount of collateral the Company places at the FHLB. As of both June 30, 2026 and December 31, 2025, the Company owned $10.3 million of FHLB stock. The Company had no outstanding advances with the FHLB Des Moines as of June 30, 2026 or December 31, 2025. As of June 30, 2026, the Company had four letters of credit outstanding with the FHLB of Des Moines to secure deposits. These letters of credit have an aggregate amount of $218.0 million and have various maturity dates through September 15, 2026. The Company’s remaining borrowing capacity with the FHLB was $2.5 billion as of June 30, 2026.

The Company utilizes repurchase agreements to facilitate the needs of customers and to facilitate secured short-term funding needs. Repurchase agreements are stated at the amount of cash received in connection with the transaction. The Company monitors collateral levels on a continuous basis and may be required to provide additional collateral based on the fair value of the underlying securities. Securities pledged as collateral under repurchase agreements are maintained with the Company’s safekeeping agents.

The table below presents the remaining contractual maturities of repurchase agreements outstanding at June 30, 2026 and December 31, 2025, in addition to the various types of marketable securities that have been pledged as collateral for these borrowings (in thousands):

 

 

 

As of June 30, 2026

 

 

 

Remaining Contractual Maturities of the Agreements

 

 

 

Overnight

 

 

2-29 Days

 

 

30-90 Days

 

 

Over 90 Days

 

 

Total

 

Repurchase agreements, secured by:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

369,417

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

369,417

 

U.S. Agencies

 

 

1,838,295

 

 

 

152,245

 

 

 

685,573

 

 

 

13,550

 

 

 

2,689,663

 

Total repurchase agreements

 

$

2,207,712

 

 

$

152,245

 

 

$

685,573

 

 

$

13,550

 

 

$

3,059,080

 

 

 

 

As of December 31, 2025

 

 

 

Remaining Contractual Maturities of the Agreements

 

 

 

2-29 Days

 

 

30-90 Days

 

 

Over 90 Days

 

 

Total

 

Repurchase agreements, secured by:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury

 

$

1,355,233

 

 

$

—

 

 

$

—

 

 

$

1,355,233

 

U.S. Agencies

 

 

1,177,072

 

 

 

759,500

 

 

 

1,000

 

 

 

1,937,572

 

Total repurchase agreements

 

$

2,532,305

 

 

$

759,500

 

 

$

1,000

 

 

$

3,292,805