LONG-TERM DEBT

12 Months Ended

Dec. 31, 2022

Long-Term Debt, Unclassified [Abstract]

11. LONG-TERM DEBT

Long-term debt, which is based on original maturity, consisted of subordinated notes and debentures totaling $105.9 million and $105.6 million at December 31, 2022 and 2021, respectively. There were no long-term FHLB advances outstanding at December 31, 2022 and 2021.


	December 31,
(Dollars in thousands)	2022		2021

Subordinated debentures	$	51,547	$	51,547
Subordinated notes, net of issuance costs	54,312		54,069
Total	$	105,859	$	105,616

At December 31, 2022, future principal payments on long-term debt based on redemption date or final maturity are as follows (dollars in thousands):


(Dollars in thousands)
Year Ending December 31:
2023	$	—
2024	—
2025	—
2026	—
2027	—
Thereafter	106,547
Total	$	106,547

FHLB Advances

The bank had no FHLB long-term advances outstanding as of December 31, 2022 and 2021. At December 31, 2022, the bank had FHLB advances available of approximately $2.19 billion, which was secured by certain real estate loans with a carrying value of $3.28 billion in accordance with the collateral provisions of the Advances, Pledge and Security Agreement with the FHLB. The bank did not incur any interest expense on FHLB long-term advances in 2022 and 2021. Interest expense on FHLB long-term advances was $1.5 million in 2020.

Subordinated Debentures

As of December 31, 2022 and 2021, the Company had the following junior subordinated debentures outstanding:


(Dollars in thousands)	December 31, 2022 and 2021
Name of Trust	Amount of Subordinated Debentures		Interest Rate
Trust IV	$	30,928	Three month LIBOR + 2.45%
Trust V	20,619		Three month LIBOR + 1.87%
Total	$	51,547

In September 2004, the Company created a wholly-owned statutory trust, CPB Capital Trust IV ("Trust IV"). Trust IV issued $30.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 2.45% and maturing on December 15, 2034. The principal assets of Trust IV are $30.9 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust IV trust preferred securities. Trust IV issued $0.9 million of common securities to the Company.

In December 2004, the Company created a wholly-owned statutory trust, CPB Statutory Trust V ("Trust V"). Trust V issued $20.0 million in floating rate trust preferred securities bearing an interest rate of three-month LIBOR plus 1.87% and maturing on December 15, 2034. The principal assets of Trust V are $20.6 million of the Company's junior subordinated debentures with an identical interest rate and maturity as the Trust V trust preferred securities. Trust V issued $0.6 million of common securities to the Company.

The Company is not considered the primary beneficiary of Trusts IV and V, therefore the trusts are not considered a variable interest entity and are not consolidated in the Company's financial statements. Rather the subordinated debentures are shown as a liability on the Company's consolidated balance sheets. The Company's investment in the common securities of the trusts are included in investment in unconsolidated entities in the Company's consolidated balance sheets.

The floating rate trust preferred securities, the junior subordinated debentures that are the assets of Trusts IV and V and the common securities issued by Trusts IV and V are redeemable in whole or in part on any interest payment date on or after December 15, 2009 for Trust IV and V, or at any time in whole but not in part within 90 days following the occurrence of certain events. Our obligations with respect to the issuance of the trust preferred securities constitute a full and unconditional guarantee by the Company of each trust's obligations with respect to its trust preferred securities. Subject to certain exceptions and limitations, we may elect from time to time to defer interest payments on the subordinated debentures, which would result in a deferral of distribution payments on the related trust preferred securities, for up to 20 consecutive quarterly periods without default or penalty.

The subordinated debentures may be included in Tier 1 capital, with certain limitations applicable, under current regulatory guidelines and interpretations.

Subordinated Notes

As of December 31, 2022 and 2021, the Company had the following subordinated notes outstanding:


(Dollars in thousands)	December 31, 2022 and 2021
Name	Amount of Subordinated Notes		Interest Rate
October 2020 Private Placement	$	55,000	4.75% for the first five years. Resets quarterly thereafter to the then current three-month SOFR.
Total	$	55,000

On October 20, 2020, the Company completed a $55.0 million private placement of ten-year fixed-to-floating rate subordinated notes, which will be used to support regulatory capital ratios and for general corporate purposes. The Company exchanged the privately placed notes for registered notes with the same terms and in the same aggregate principal amount at the end of the fourth quarter of 2020. The Notes bear a fixed interest rate of 4.75% for the first five years through November 1, 2025 and will reset quarterly thereafter for the remaining five years to the then current three-month Secured Overnight Financing Rate ("SOFR"), as published by the Federal Reserve Bank of New York, plus 456 basis points.

The subordinated notes may be included in Tier 2 capital, with certain limitations applicable, under current regulatory guidelines and interpretations. The subordinated notes had a carrying value of $54.3 million, net of unamortized debt issuance costs of $0.7 million, at December 31, 2022.