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Long-Term Debt | 12 Months Ended
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Dec. 31, 2023
Debt Disclosure [Abstract] |
Long-Term Debt | Long-Term Debt (In Thousands) Long-term debt as of December 31, 2023 and 2022 is summarized as follows:
| 2023 |  | 2022
Federal Home Loan Bank advances | $ | — |  |  | $ | — |
Junior subordinated debentures | 112,978 |  |  | 112,042 |
Subordinated notes | 316,422 |  |  | 316,091 |
Total long-term debt | $ | 429,400 |  |  | $ | 428,133 |
Federal Home Loan Bank Advances Long-term FHLB borrowings, of which none were outstanding at December 31, 2023 and 2022, are used to match fund fixed rate loans in order to minimize interest rate risk and also are used to meet day to day liquidity needs, particularly when the cost of such borrowings compares favorably to the rates required to attract deposits. The Company did not prepay any outstanding long-term advances from the FHLB during 2023 and 2022. In connection with the prepayment of $150,000 in long-term advances from the FHLB during 2021, the Company incurred penalty charges of $6,123 which is included in the line item “Debt prepayment penalty” in the Consolidated Statements of Income. Junior Subordinated Debentures The Company owns the outstanding common securities of business trusts that issued corporation-obligated mandatorily redeemable preferred capital securities to third-party investors. The trusts used the proceeds from the issuance of their preferred capital securities and common securities (collectively referred to as “capital securities”) to buy floating rate junior subordinated debentures issued by the Company (or by companies that the Company subsequently acquired). The debentures are the trusts’ only assets and interest payments from the debentures finance the distributions paid on the capital securities. Distributions on the capital securities are payable quarterly at a rate per annum equal to the interest rate being earned by the trusts on the debentures held by the trusts. The capital securities are subject to mandatory redemption, in whole or in part, upon repayment of the debentures. The Company has entered into an agreement which fully and unconditionally guarantees the capital securities of each trust subject to the terms of the guarantee. The interest rate on the debentures reprices quarterly equal to the three-month CME Term SOFR at the determination date plus the applicable spread. The debentures owned by the respective trusts are currently redeemable at par. The following table provides the details of the debentures as of December 31, 2023:
| Principal Amount |  | Carrying Value |  | Spread (in bps) |  | Year of Maturity |  | Amount Included in Tier 1 Capital
PHC Statutory Trust I | $ | 20,619 |  |  | $ | 20,619 |  |  | 285 |  | 2033 |  | $ | 20,000 |
PHC Statutory Trust II | 31,959 |  |  | 31,959 |  |  | 187 |  | 2035 |  | 31,000 |
Capital Bancorp Capital Trust I | 12,372 |  |  | 12,372 |  |  | 150 |  | 2035 |  | 12,000 |
First M&F Statutory Trust I | 30,928 |  |  | 24,620 |  |  | 133 |  | 2036 |  | 23,693 |
Brand Trust I | 10,310 |  |  | 9,675 |  |  | 205 |  | 2035 |  | 9,365 |
Brand Trust II | 5,155 |  |  | 5,200 |  |  | 300 |  | 2037 |  | 5,045 |
Brand Trust III | 5,155 |  |  | 5,200 |  |  | 300 |  | 2038 |  | 5,045 |
Brand Trust IV | 3,093 |  |  | 3,333 |  |  | 375 |  | 2038 |  | 3,240 |
Total |  |  | $ | 112,978 |  |  |  |  |  |  | $ | 109,388 |
The Company has entered into an interest rate swap agreement on the First M&F Statutory Trust I pursuant to which the Company received an amount approximately equal to the interest paid on the debentures and paid a fixed rate of interest equal to 4.18% at December 31, 2023. Federal Reserve guidelines limit the amount of securities that, similar to the Company’s junior subordinated debentures, are includable in Tier 1 capital, but these guidelines did not impact the amount of debentures the Company includes in Tier 1 capital. Although the Company’s existing junior subordinated debentures are currently unaffected by these Federal Reserve guidelines, on account of changes enacted as part of the Dodd-Frank Act, any new trust preferred securities are not includable in Tier 1 capital. For more information about the Company’s derivative financial instruments, see Note 13, “Derivative Instruments.” Subordinated notes The Company has issued and sold fixed-to-floating rate subordinated notes (referred to collectively as the “Notes”) in underwritten public offerings at a price equal to 100% of the aggregate principal amounts of the Notes. Interest on the Notes is payable semi-annually in arrears at the applicable fixed rate until but excluding the fixed to floating transition date and payable quarterly in arrears thereafter at the applicable benchmark rate plus spread, until but excluding the maturity date or earlier redemption date. A summary of the Notes is as follows:
Issue Date | Initial principal |  | Fixed rate |  | Fixed to floating transition date |  | Benchmark rate |  | Spread (in bps) |  | Debt outstanding |  | Maturity
August 22, 2016 | $ | 40,000 |  |  | 5.50% |  | September 1, 2026 |  | 3-month CME Term SOFR |  | 407.1 |  | $ | 40,000 |  |  | September 1, 2031
September 3, 2020 | $ | 100,000 |  |  | 4.50% |  | September 15, 2030 |  | 3-month CME Term SOFR |  | 402.5 |  | $ | 100,000 |  |  | September 15, 2035
November 23, 2021 | $ | 200,000 |  |  | 3.00% |  | December 1, 2026 |  | 3-month CME Term SOFR |  | 191 |  | $ | 196,700 |  |  | December 1, 2031
Debt issuance costs and fair value adjustment |  |  |  |  |  | (20,278) |  |  |
Total subordinated debt |  |  |  |  |  | $ | 316,422 |  |  |
Beginning with the fixed to floating transition date and on any interest payment date thereafter, the Company may redeem the applicable Notes in whole or in part at a redemption price equal to 100% of the principal amount of the respective Notes to be redeemed plus accrued and unpaid interest to but excluding the date of redemption. The Company may also redeem any series of the Notes at any time, at the Company’s option, in whole or 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, the redemption price is 100% of the principal amount of the Notes being redeemed plus any accrued and unpaid interest to but excluding the redemption date. There is no sinking fund for the benefit of the Notes, and none of the Notes are convertible or exchangeable. During 2023, the Company purchased and subsequently extinguished $3,300 of its aggregate $200,000 fixed-to-floating subordinated notes and realized a gain of $620. During October and December 2021, respectively, the Company redeemed at par its $15,000 6.50% fixed-to-floating rate subordinated notes and redeemed $30,000 of its aggregate $60,000 5.00% fixed-to-floating rate subordinated notes, with the remaining $30,000 of such notes redeemed in the first quarter of 2022. The aggregate stated maturities of long-term debt outstanding at December 31, 2023, are summarized as follows:
| Federal Home Loan Bank advances |  | Junior subordinated debentures |  | Subordinated notes |  | Total
2024 | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
2025 | — |  |  | — |  |  | — |  |  | — |
2026 | — |  |  | — |  |  | — |  |  | — |
2027 | — |  |  | — |  |  | — |  |  | — |
2028 | — |  |  | — |  |  | — |  |  | — |
Thereafter | — |  |  | 112,978 |  |  | 316,422 |  |  | 429,400 |
Total | $ | — |  |  | $ | 112,978 |  |  | $ | 316,422 |  |  | $ | 429,400 |

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