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Borrowings
 12 Months Ended
Dec. 31, 2023
Borrowings  
Borrowings

Note 14: Borrowings

Borrowings were comprised of the following at December 31, 2023 and 2022:

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December 31, 

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2023

    

2022

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(In thousands)

Federal Reserve discount window borrowings

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$

—

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$

20,000

Short-term subordinated debt

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64,922

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21,000

FHLB advances

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771,392

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859,392

American Financial Exchange borrowing

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—

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30,000

Credit linked notes

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119,879

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​

—

Other borrowings

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7,934

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—

Total borrowings

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$

964,127

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$

930,392

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Federal Reserve Discount Window Borrowings

Federal Reserve discount window borrowings are secured by the collateral value of commercial, agricultural, construction and 1-4 family residential real estate loans totaling $3.1 billion and $2.4 billion as of December 31, 2023 and 2022, respectively. This arrangement has a maximum borrowing limit of collateral pledged multiplied by an advance rate. Borrowing maturities can range from 24 hours to up to a term of 90 days. Life to date, all Company borrowings were for a 24-hour period. As of December 31, 2023 and 2022, the outstanding balance was $0 and $20.0 million, respectively.

Short-Term Subordinated Debt

The Company entered into a warehouse financing arrangement in April 24, 2018 and was revised in December 2023, whereby a customer agreed to invest up to $60.0 million in the Company’s subordinated debt. The subordinated debt balance as of December 31, 2023 and 2022 was $39.0 million and $21.0 million, respectively. As of December 31, 2023, interest on the debt is paid quarterly by the Company at a rate equal to SOFR, plus 300 basis points, plus additional interest equal to 50% of the earnings generated. There is also a guaranteed interest rate floor associated with these earnings. The agreement is automatically renewed annually on June 30th for one or more terms of two years each unless either party notifies the other party at least 180 days prior to its renewable date, of its desire not to continue the relationship. As of December 31, 2023, neither party had made a notification of its intent to cancel this arrangement.

Additionally, the Company entered into an additional warehouse financing agreement on April 14, 2023 and revised on July 20, 2023, whereby a customer agreed to invest up to $30 million in the Company’s subordinated debt. The subordinated debt balance as of December 31, 2023 and 2022 was $25.9 million and $0, respectively. As of December 31, 2023, interest on the debt is paid quarterly by the Company at a rate equal to SOFR, plus 300 basis points, plus additional interest equal to 50% of the earnings generated. The agreement is automatically renewed annually on June 30th for one or more terms of two years each unless either party notifies the other party at least 180 days prior to its

renewable date, of its desire not to continue the relationship. As of December 31, 2023, neither party had made a notification of its intent to cancel this arrangement.

FHLB Advances

FHLB advances are secured by the collateral value of mortgage loans totaling $3.4 billion and $2.8 billion at December 31, 2023 and 2022, respectively. In addition, securities available for sale, securities held to maturity, and securities purchased under agreements to resell with a carrying value of $971.3 million and $298.6 million were pledged as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the outstanding balances were $771.4 million and $859.4 million, respectively. At December 31, 2023 the FHLB advances had interest rates ranging from 2.18% to 5.52%, and ranged from 1.62% to 4.9% at December 31, 2022. These rates were subject to restrictions or penalties in the event of prepayment.

American Financial Exchange Borrowing

The Company joined the American Financial Exchange (“AFX”) in January of 2021. During the year ended December 31, 2023, the Company utilized unsecured overnight lending arrangements to borrow from other AFX members through extensions of credit. At December 31, 2023 and 2022, members of the AFX offered a combined borrowing limit of $390.0 million and $500.0 million, respectively, but availability fluctuates daily. As of December 31, 2023, the outstanding balance was $0. As of December 31, 2022, the outstanding balance was $30.0 million with a rate of 4.60%. Rates are set daily by participating members and may vary by lending member.

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Credit Linked Notes

On March 30, 2023, the Company issued and sold $158.1 million senior credit linked notes, due May 26, 2028. The net proceeds of the offering were approximately $153.5 million. The repayment of principal on the notes is linked to an approximately $1.1 billion reference pool of loans originated under the Bank’s healthcare commercial real estate lending program, but the notes are not secured by the loans. The notes provide periodic payments of interest in addition to payment of principal over the life of the note and these values are tied to the performance of the loans. Therefore, the notes effectively transfer credit risk in excess of the first 1% of losses on the reference pool of loans. The reduction in risk weighted assets provides additional balance sheet capacity and benefits capital ratios for additional growth in the existing loan pipeline. The Company maintains the ACL associated with the loans in the reference pool on the Company’s balance sheet.

The notes accrue interest at a rate equal to SOFR plus 15.50% and interest pays monthly. As of December 31, 2023, the effective interest rate was 20.9% and the balance, net of debt discount, of the notes was $119.9 million.

The notes are secured by a restricted collateral account which the Company is required to maintain with a third-party financial institution. The collateral account maintains an amount equal to at least the aggregate unpaid principal of the notes. As of December 31, 2023, the account included $36.4 million of restricted cash and $89.0 million in short-term Treasury securities. These are reported as cash equivalents and securities available for sale in the consolidated balance sheets.

Other Borrowings

On May 4, 2023, the Company entered into a debt agreement that ultimately funded from a Sponsor Improvement Contribution as part of a low-income tax credit syndication transaction. The debt balance as of December 31, 2023 and 2022 was $7.9 million and $0, respectively. As of December 31, 2023, interest on the debt is paid by the Company at a rate equal to 1%. The agreement has a maturity date of December 31, 2047.

Maturities of borrowings were as follows at December 31, 2023:

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Short-Term

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FHLB

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Credit Linked

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Other

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Borrowings

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Subordinated Debt

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Advances

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Notes

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Borrowings

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Total

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Due within one year

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$

—

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$

754,284

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$

—

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$

—

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$

754,284

Due in one year to two years

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64,922

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15,759

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—

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—

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80,681

Due in two years to three years

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—

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260

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—

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—

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260

Due in three years to four years

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—

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150

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—

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—

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150

Due in four years to five years

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—

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59

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119,879

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—

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119,938

Thereafter

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—

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880

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—

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7,934

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8,814

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$

64,922

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$

771,392

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$

119,879

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$

7,934

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$

964,127

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At December 31, 2023, the Company had excess borrowing capacity of approximately $6.0 billion with the FHLB and the Federal Reserve discount window, based on available collateral.