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Subordinated Debentures | 12 Months Ended
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Dec. 31, 2023
Debt Disclosure [Abstract] |
Subordinated Debentures | Note 9 — Borrowings Borrowings consisted of FHLB advances, which represent collateralized obligations with the FHLB. The following is a summary of contractual maturities of FHLB advances:
|  | As of December 31, |
|  | 2023 |  |  | 2022 |
|  | Outstanding Balance |  |  | Weighted Average Rate |  |  | Outstanding Balance |  |  | Weighted Average Rate |
|  | (dollars in thousands) |
Open advances |  | $ | 212,500 |  |  |  | 5.70 | % |  | $ | 250,000 |  |  |  | 4.65 | %
Advances due within 12 months |  |  | 37,500 |  |  |  | 0.40 |  |  |  | 50,000 |  |  |  | 0.97 |
Advances due over 12 months through 24 months |  |  | 12,500 |  |  |  | 1.90 |  |  |  | 37,500 |  |  |  | 0.40 |
Advances due over 24 months through 36 months |  |  | 62,500 |  |  |  | 4.37 |  |  |  | 12,500 |  |  |  | 1.90 |
Outstanding advances |  | $ | 325,000 |  |  |  | 4.69 | % |  | $ | 350,000 |  |  |  | 3.57 | %
The following is financial data pertaining to FHLB advances:
|  | As of December 31, |
|  | 2023 |  |  | 2022 |  |  | 2021 |
|  | (dollars in thousands) |
Weighted-average interest rate at end of year |  |  | 4.69 | % |  |  | 3.57 | % |  |  | 1.05 | %
Weighted-average interest rate during the year |  |  | 3.48 | % |  |  | 1.52 | % |  |  | 1.17 | %
Average balance of FHLB advances |  | $ | 197,390 |  |  | $ | 148,027 |  |  | $ | 145,277 |
Maximum amount outstanding at any month-end |  | $ | 450,000 |  |  | $ | 350,000 |  |  | $ | 162,500 |
We have pledged loans receivable with carrying values of $2.36 billion at December 31, 2023, as collateral with the FHLB for this borrowing facility. The total borrowing capacity available from the pledged collateral is $1.54 billion, of which $1.09 billion remained available at December 31, 2023. At December 31, 2023, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window and the BTFP was $23.2 million on pledged securities with market values of $24.8 million, none of which was outstanding. At December 31, 2022, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window was $22.0 million on pledged securities with market values of $23.4 million, none of which was outstanding. At December 31, 2023, advances from the FHLB with a weighted average interest rate of 4.69% were $325.0 million, a decrease of $25.0 million from $350.0 million with a weighted average interest rate of 3.57% at December 31, 2022. FHLB open advances were $212.5 million with a weighted average interest rate of 5.70% while the remainder of term advances were $112.5 million with a weighted average interest rate of 2.77% at December 31, 2023. At December 31, 2022, the Bank had $250.0 million of open advances and $100.0 million of term advances at the FHLB with a weighted average rate of 4.65% and 0.87%, respectively. For the years ended December 31, 2023, 2022 and 2021, interest expense on FHLB advances were $6.9 million, $2.2 million and $1.7 million, respectively, and the weighted-average interest rates were 3.48%, 1.52% and 1.17%, respectively. Note 10 — Subordinated Debentures On August 20, 2021, the Company issued Fixed-to-Floating Subordinated Notes (“2031 Notes”) of $110.0 million with a final maturity date of September 1, 2031. The 2031 Notes have an initial fixed interest rate of 3.75% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, up to but excluding September 1, 2026. From and including September 1, 2026 and thereafter, the 2031 Notes will bear interest at a floating rate per annum equal to the Benchmark rate (which is expected to be the Three-Month Term SOFR) plus 310 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. If the then current three-month term SOFR rate is less than zero, the three-month SOFR will be deemed to be zero. Debt issuance cost was $2.1 million, which is being amortized through the 2031 Notes maturity date. At December 31, 2023 and 2022, the balance of the 2031 Notes included in the Company’s Consolidated Balance Sheet, net of debt issuance cost, was $108.3 million and $108.2 million, respectively. The amortization of debt issuance cost was $183,000, $176,000 and $62,000 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company issued Fixed-to-Floating Subordinated Notes (“2027 Notes”) of $100.0 million on March 21, 2017, with a final maturity on March 30, 2027. The Notes have an initial fixed interest rate of 5.45% per annum, payable semi-annually on March 30 and September 30 of each year. From and including March 30, 2022 and thereafter, the 2027 Notes bear interest at a floating rate equal to the then current three-month LIBOR, as calculated on each applicable date of determination, plus 3.315% payable quarterly. If the then current three-month LIBOR is less than zero, three-month LIBOR will be deemed to be zero. Debt issuance cost was $2.3 million, which is being amortized through the Note’s maturity date. During the year ended December 31, 2022, the Company redeemed its 2027 Notes. A portion of the redemption was funded with the proceeds from the Company’s 2021 subordinated debt offering. The redemption price for each of the 2027 Notes equaled 100% of the outstanding principal amount redeemed, plus any accrued and unpaid interest thereon. All interest accrued on the 2027 Notes ceased to accrue on and after March 30, 2022. Upon the redemption, the Company recognized a pre-tax charge of $1.1 million for the remaining unamortized debt issuance costs associated with the 2027 Notes. The amortization of debt issuance cost was $1.1 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. At December 31, 2023 and 2022, the balance of Fixed-to-Floating Subordinated Notes included in the Company’s Consolidated Balance Sheet, net of debt issuance cost, was $108.3 million and $108.2 million, respectively. The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of an acquisition in 2014 with an unpaid principal balance of $26.8 million and an estimated fair value of $18.5 million. The $8.3 million discount is being amortized to interest expense through the debentures’ maturity date of March 15, 2036. A trust was formed in 2005 which issued $26.0 million of Trust Preferred Securities (“TPS”) at a 6.26% fixed rate for the first five years and a variable rate at the three-month LIBOR plus 140 basis points thereafter and invested the proceeds in the Subordinated Debentures. The rate on the TPS at December 31, 2023 was 7.05%. Beginning September 15, 2023, the variable rate on the TPS changed to the three-month SOFR plus approximately 166 basis points, representing a credit spread of 140 basis points and an approximate 26 basis point adjustment to convert three-month LIBOR to three-month SOFR. The Company may redeem the Subordinated Debentures at an earlier date if certain conditions are met. The TPS will be subject to mandatory redemption if the Subordinated Debentures are repaid by the Company. Interest is payable quarterly, and the Company has the option to defer interest payments on the Subordinated Debentures from time to time for a period not to exceed five consecutive years. At December 31, 2023 and 2022, the balance of Subordinated Debentures included in the Company’s Consolidated Balance Sheets, net of discount of $5.1 million and $5.6 million, was $21.7 million and $21.2 million, respectively. The amortization of discount was $420,000, $412,000 and $402,000 for the years ended December 31, 2023, 2022 and 2021, respectively.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 235 -SubTopic 10 -Name Accounting Standards Codification -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(c)) -Publisher FASB -URI https://asc.fasb.org//1943274/2147480678/235-10-S99-1 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 470 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//470/tableOfContent Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1B -Subparagraph (i) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1C -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1C Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1E -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1I -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I + Details
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