XML 39 R19.htm IDEA: XBRL DOCUMENT v3.25.0.1
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
SHORT-TERM BORROWINGS AND LONG-TERM DEBT
10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT

The Bank is a member of the FHLB and maintained a $1.76 billion line of credit, of which $1.63 billion remained available as of December 31, 2024. The FHLB advances available of $1.63 billion at December 31, 2024 was secured by certain real estate loans with a carrying value of $3.14 billion in accordance with the collateral provisions of the Advances, Pledge and Security Agreement with the FHLB. There were no short-term borrowings outstanding under this arrangement at December 31, 2024 and 2023.

The FHLB provides standby letters of credit on behalf of the Bank to secure certain public deposits. If the FHLB is required to make a payment on a standby letter of credit, the payment amount is converted to an advance at the FHLB. The standby letters of credit issued on our behalf by the FHLB totaled $83.6 million and $72.0 million as of December 31, 2024 and 2023, respectively.

The Bank had additional unused borrowings available at the Federal Reserve discount window of $232.1 million and $285.8 million as of December 31, 2024 and 2023, respectively. Certain commercial real estate and commercial loans with carrying values totaling $128.3 million and $135.1 million were pledged as collateral on our line of credit with the Federal Reserve discount window as of December 31, 2024 and 2023, respectively. In addition, investment securities with a par value of $184.3 million and $196.7 million as of December 31, 2024 and 2023, respectively, were pledged to the Federal Reserve in support of the line of credit. The Federal Reserve does not have the right to sell or repledge these loans and investment securities.
Interest expense on short-term borrowings totaled $1 thousand, $1.1 million and $1.1 million in 2024, 2023 and 2022, respectively.

A summary of the Bank's short-term borrowings as of December 31, 2024, 2023 and 2022 is as follows:

Year Ended December 31,
(Dollars in thousands)202420232022
Amount outstanding at December 31,$— $— $5,000 
Average amount outstanding during year17 23,322 37,211 
Highest month-end balance during year6,000 100,000 140,000 
Weighted-average interest rate on balances outstanding at December 31,— %— %4.60 %
Weighted-average interest rate during year5.58 %4.88 %2.84 %
Long-term debt, which is based on original maturity, consisted of FHLB advances, subordinated notes and debentures totaling $156.3 million and $156.1 million at December 31, 2024 and 2023, respectively.

December 31,
(Dollars in thousands)20242023
FHLB advances$50,000 $50,000 
Subordinated debentures51,547 51,547 
Subordinated notes, net of unamortized debt issuance costs of $202 and $445
54,798 54,555 
Total$156,345 $156,102 

At December 31, 2024, future principal payments on long-term debt based on redemption date or final maturity are as follows:

(Dollars in thousands)
Year Ending December 31:
2025$25,000 
2026— 
2027— 
202825,000 
2029— 
Thereafter106,547 
Total$156,547 

FHLB Advances

The Bank had $50.0 million in FHLB long-term advances outstanding as of December 31, 2024 and 2023. Interest expense on FHLB long-term advances was $2.2 million and $1.9 million in 2024 and 2023, respectively. The Bank did not incur any interest expense on FHLB long-term advances in 2022.

Subordinated Debentures

As of December 31, 2024 and 2023, the Company had the following junior subordinated debentures outstanding:
(Dollars in thousands)
December 31, 2024 and 2023
December 31, 2024 and 2023
Name of Trust
Subordinated Debentures
Interest Rate
Trust IV$30,928 
Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 2.45%
Trust V20,619 
Three-month CME Term SOFR + tenor spread adjustment of 0.26% + 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 which bore 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 which bore 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.

On July 3, 2023, after the cessation of the LIBOR benchmark rate on June 30, 2023, the Company amended its Trust IV and Trust V debt agreements to replace the LIBOR-based reference rate with an adjusted CME Term Secured Overnight Financing Rate ("SOFR") plus a tenor spread adjustment. ASC 848 allows us to account for the modification as a continuation of the existing contract without additional analysis.

The Company is not considered the primary beneficiary of Trusts IV and V and the trusts are not consolidated in the Company's financial statements. 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, 2024 and 2023, the Company had the following subordinated notes outstanding:

(Dollars in thousands)
December 31, 2024 and 2023
Name
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 plus 456 basis points.

On October 20, 2020, the Company completed a $55.0 million private placement of ten-year fixed-to-floating rate subordinated notes. 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, which have been used to support regulatory capital ratios and for general corporate purposes, 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 are callable at any time after the first five years, or November 1, 2025.
 
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 $54.8 million, net of unamortized debt issuance costs of $0.2 million, at December 31, 2024.