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Long Term Debt and Other Borrowings
 6 Months Ended
Jun. 30, 2024
Debt Disclosure [Abstract]  
Long Term Debt and Other Borrowings Long Term Debt and Other Borrowings
Subordinated notes: On August 17, 2022, the Company completed a private placement of $75.0 million of fixed-to-floating rate subordinated notes to certain qualified investors, of which $19.3 million was purchased by existing or former members of the board of directors and their affiliates. The notes will be used for capital management and general corporate purposes, including, without limitation, the redemption of existing subordinated notes. The subordinated notes have a maturity date of September 1, 2032 and bear interest, payable semi-annually, at the rate of 6.00% per annum until September 1, 2027. On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points (8.60% as of June 30, 2024) until maturity. The notes include a right of prepayment, on or after August 17, 2027 or, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated notes, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors and depositors of the Company.
The subordinated notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. Eligible amounts will be phased out by 20% per year beginning five years before the maturity date of the notes. Debt issuance costs incurred in conjunction with the notes were $1.5 million, of which $0.3 million has been amortized as of June 30, 2024. The Company reflects debt issuance costs as a direct deduction from the face of the note. The debt issuance costs are amortized into interest expense through the maturity period. At June 30, 2024 and December 31, 2023, the carrying value of the Company’s subordinated notes outstanding was $73.8 million and $73.7 million, respectively.
Other borrowings: The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on certain loans receivable as collateral for a borrowing line. The Company’s total financing availability is based on the dollar
volume of qualifying loan collateral. The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.
Table 6.1: Financing Availability with the FHLB
(in thousands)June 30, 2024December 31, 2023
Total financing ability from the FHLB
$1,004,397 $996,712 
Less: outstanding borrowings
— 170,000 
Less: LCs pledged to secure State of California deposits
146,500 271,500 
Less: LCs pledged to secure local agency deposits
425,000 410,000 
Total LCs issued
571,500 681,500 
Available borrowing capacity with the FHLB
$432,897 $145,212 
At June 30, 2024 and December 31, 2023, the Company had the ability to borrow from the Federal Reserve Discount Window. At June 30, 2024 and December 31, 2023, the borrowing capacity under this arrangement was $829.2 million and $770.6 million, respectively. There were no amounts outstanding at June 30, 2024 and December 31, 2023. The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.
At June 30, 2024 and December 31, 2023, the Company had five unsecured federal funds lines of credit with its correspondent banks totaling $175.0 million. There were no amounts outstanding at June 30, 2024 and December 31, 2023.