Note 9. Borrowings, Subordinated Debentures and Brokered Deposits

Borrowings

The following table summarizes our borrowings as of the dates indicated:



	September 30, 2014				December 31, 2013
	Amount		Rate		Amount		Rate
	(Dollars in thousands)
Non‑recourse debt	$	3,672	6.26	%	$	7,126	6.30	%
FHLB overnight advances	360,000		0.07	%	106,600		0.06	%
Total borrowings	$	363,672			$	113,726

The non‑recourse debt represents the payment stream of certain equipment leases sold to third parties. The debt is secured by the equipment in the leases and all interest rates are fixed. As of September 30, 2014, this debt had a weighted average remaining maturity of 2.2 years.

The Bank has established secured and unsecured lines of credit. We may borrow funds from time to time on a term or overnight basis from the FHLB SF, the Federal Reserve Bank of San Francisco (“FRBSF”), or other financial institutions.

FHLB SF Secured Lines of Credit. The borrowing arrangement with the FHLB SF is based on an FHLB program collateralized by a blanket lien on certain qualifying loans in our loan portfolio which were not pledged to the FRBSF. As of September 30, 2014, our borrowing capacity under the FHLB SF secured borrowing lines was $2.4 billion. As of September 30, 2014 and December 31, 2013, the balances outstanding were $360.0 million and $106.6 million, respectively.

FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of September 30, 2014, the Bank had secured borrowing capacity of $1.0 billion collateralized by liens covering $1.4 billion of certain qualifying loans. As of September 30, 2014 and December 31, 2013, there were no balances outstanding.

Federal Funds Arrangements with Commercial Banks. As of September 30, 2014, the Bank had unsecured lines of credit of $80.0 million with correspondent banks for the purchase of overnight funds, subject to availability of funds. These lines are renewable annually and have no unused commitment fees. As of September 30, 2014 and December 31, 2013, there were no balances outstanding.

The following table summarizes the terms of each issuance of subordinated debentures outstanding as of the dates indicated:



	September 30, 2014					December 31, 2013
											Date	Maturity	Rate Index
Series	Amount			Rate ⁽¹⁾		Amount			Rate ⁽²⁾		Issued	Date	(Quarterly Reset)
	(Dollars in thousands)
Trust V	$	10,310		3.33	%	$	10,310		3.34	%	8/15/2003	9/17/2033	3 month LIBOR + 3.10
Trust VI	10,310			3.28	%	10,310			3.29	%	9/3/2003	9/15/2033	3 month LIBOR + 3.05
Trust CII	5,155			3.18	%	5,155			3.19	%	9/17/2003	9/17/2033	3 month LIBOR + 2.95
Trust VII	61,856			2.99	%	61,856			2.99	%	2/5/2004	4/23/2034	3 month LIBOR + 2.75
Trust CIII	20,619			1.92	%	20,619			1.93	%	8/15/2005	9/15/2035	3 month LIBOR + 1.69
Trust FCCI	16,495			1.83	%	16,495			1.84	%	1/25/2007	3/15/2037	3 month LIBOR + 1.60
Trust FCBI	10,310			1.78	%	10,310			1.79	%	9/30/2005	12/15/2035	3 month LIBOR + 1.55
Trust CS 2005-1 ⁽³⁾	82,475			2.18	%	—			—		11/21/2005	12/15/2035	3 month LIBOR + 1.95
Trust CS 2005-2 ⁽³⁾	128,866			2.19	%	—			—		12/14/2005	1/30/2036	3 month LIBOR + 1.95
Trust CS 2006-1 ⁽³⁾	51,545			2.19	%	—			—		2/22/2006	4/30/2036	3 month LIBOR + 1.95
Trust CS 2006-2 ⁽³⁾	51,550			2.19	%	—			—		9/27/2006	10/30/2036	3 month LIBOR + 1.95
Trust CS 2006-3 ⁽³⁾	32,551			1.29	%	—			—		9/29/2006	10/30/2036	3 month EURIBOR + 2.05
Trust CS 2006-4 ⁽³⁾	16,470			2.19	%	—			—		12/5/2006	1/30/2037	3 month LIBOR + 1.95
Trust CS 2006-5 ⁽³⁾	6,650			2.19	%	—			—		12/19/2006	1/30/2037	3 month LIBOR + 1.95
Trust CS 2007-2 ⁽³⁾	39,177			2.19	%	—			—		6/13/2007	7/30/2037	3 month LIBOR + 1.95
Gross subordinated debentures	544,339					135,055
Unamortized discount ⁽⁴⁾	(110,794		)			(2,410		)
Net subordinated debentures	$	433,545				$	132,645

___________________


(1)	As of September 30, 2014.


(2)	As of January 28, 2014.


(3)	Acquired in the CapitalSource Inc. merger.


(4)	Amount represents the fair value adjustment on trust preferred securities assumed in the CapitalSource Inc. and FCAL acquisitions.

Interest payments made by the Company on subordinated debentures are considered dividend payments under the Board of Governors of the Federal Reserve System (“FRB”) regulations. Bank holding companies, such as PacWest, are required to notify the FRB prior to declaring and paying a dividend to stockholders during any period in which quarterly and/or cumulative twelve‑month net earnings are insufficient to fund the dividend amount, among other requirements.

Brokered Deposits

Brokered time deposits totaled $288.2 million and $49.4 million at September 30, 2014 and December 31, 2013, respectively. During the third quarter, the Company added $200.0 million of brokered time deposits. Brokered time deposits under the Certificate of Deposit Account Registry Service Program ("CDARS Program") totaled $48.2 million and $49.4 million at September 30, 2014 and December 31, 2013, respectively. The CDARS Program represents deposits that are participated with other FDIC‑insured financial institutions as a means to provide FDIC deposit insurance coverage for the full amount of our customers’ deposits.