Borrowings and Subordinated Debentures

12 Months Ended

Dec. 31, 2020

NOTE 11. BORROWINGS AND SUBORDINATED DEBENTURES

Borrowings

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


	December 31,
	2020				2019
			Weighted				Weighted
			Average				Average
Borrowing Type	Balance		Rate		Balance		Rate
	(Dollars in thousands)
FHLB secured advances	$	5,000	—	%	$	1,318,000	1.66	%
FHLB unsecured overnight advance	—		—	%	141,000		1.56	%
AFX borrowings	—		—	%	300,000		1.61	%
Non‑recourse debt	—		—	%	8		7.50	%
Total borrowings	$	5,000	—	%	$	1,759,008	1.64	%

The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, the FRBSF, and other financial institutions.

FHLB Secured Line of Credit. The Bank had secured borrowing capacity with the FHLB of $3.3 billion as of December 31, 2020, collateralized by a blanket lien on $5.6 billion of qualifying loans. During the second quarter of 2020, the Company prepaid $750.0 million of FHLB term advances borrowed in the first quarter of 2020 and incurred $6.6 million of prepayment penalties, which is included in "Other expense" on the consolidated statements of earnings (loss). The FHLB term advances had a weighted average interest rate of 0.96% and the prepayment decision was made after the significant drop in market interest rates in March 2020 and the expectation of continued low interest rates for an extended time.

The following table presents the interest rates and maturity dates of FHLB secured advances as of the dates indicated:


	December 31,
	2020					2019
					Maturity					Maturity
	Balance		Rate		Date	Balance		Rate		Date
	(Dollars in thousands)
Overnight advance	$	—	—	%	—	$	1,318,000	1.66	%	1/2/2020
Term advance	5,000		—	%	5/6/2021	—		—	%	—


Total FHLB secured advances	$	5,000	—	%		$	1,318,000	1.66	%

FRBSF Secured Line of Credit. The Bank had secured borrowing capacity with the FRBSF of $1.4 billion as of December 31, 2020, collateralized by liens on $1.9 billion of qualifying loans. As of December 31, 2020 and 2019, there were no balances outstanding.

FHLB Unsecured Line of Credit. As of December 31, 2020, the Bank had a $112.0 million unsecured line of credit with the FHLB for the borrowing of overnight funds, of which none was outstanding. As of December 31, 2019, the balance outstanding was $141.0 million.

Federal Funds Arrangements with Commercial Banks. As of December 31, 2020, the Bank had unsecured lines of credit of $180.0 million in the aggregate with several correspondent banks for the borrowing of overnight funds, subject to availability of funds. These lines are renewable annually and have no unused commitment fees. As of December 31, 2020 and 2019, there were no balances outstanding. The Bank is a member of the AFX, through which it may either borrow or lend funds on an overnight or short-term basis with a group of pre-approved commercial banks. The availability of funds changes daily. As of December 31, 2020, there was no borrowing. As of December 31, 2019, there were $300.0 million in overnight borrowings outstanding.

Subordinated Debentures

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


	December 31,
	2020				2019				Issue	Maturity	Rate Index
Series	Balance		Rate		Balance		Rate		Date	Date	(Quarterly Reset)
	(Dollars in thousands)
Trust V	$	10,310	3.33	%	$	10,310	5.00	%	8/15/2003	9/17/2033	3-month LIBOR +	3.10%
Trust VI	10,310		3.27	%	10,310		4.94	%	9/3/2003	9/15/2033	3-month LIBOR +	3.05%
Trust CII	5,155		3.18	%	5,155		4.85	%	9/17/2003	9/17/2033	3-month LIBOR +	2.95%
Trust VII	61,856		2.96	%	61,856		4.69	%	2/5/2004	4/23/2034	3-month LIBOR +	2.75%
Trust CIII	20,619		1.91	%	20,619		3.58	%	8/15/2005	9/15/2035	3-month LIBOR +	1.69%
Trust FCCI	16,495		1.82	%	16,495		3.49	%	1/25/2007	3/15/2037	3-month LIBOR +	1.60%
Trust FCBI	10,310		1.77	%	10,310		3.44	%	9/30/2005	12/15/2035	3-month LIBOR +	1.55%
Trust CS 2005-1	82,475		2.17	%	82,475		3.85	%	11/21/2005	12/15/2035	3-month LIBOR +	1.95%
Trust CS 2005-2	128,866		2.16	%	128,866		3.89	%	12/14/2005	1/30/2036	3-month LIBOR +	1.95%
Trust CS 2006-1	51,545		2.16	%	51,545		3.89	%	2/22/2006	4/30/2036	3-month LIBOR +	1.95%
Trust CS 2006-2	51,550		2.16	%	51,550		3.89	%	9/27/2006	10/30/2036	3-month LIBOR +	1.95%
Trust CS 2006-3 (1)	31,487		1.54	%	28,902		1.64	%	9/29/2006	10/30/2036	3-month EURIBOR +	2.05%
Trust CS 2006-4	16,470		2.16	%	16,470		3.89	%	12/5/2006	1/30/2037	3-month LIBOR +	1.95%
Trust CS 2006-5	6,650		2.16	%	6,650		3.89	%	12/19/2006	1/30/2037	3-month LIBOR +	1.95%
Trust CS 2007-2	39,177		2.16	%	39,177		3.89	%	6/13/2007	7/30/2037	3-month LIBOR +	1.95%
Gross subordinated debentures	543,275		2.24	%	540,690		3.87	%
Unamortized discount (2)	(77,463)				(82,481)
Net subordinated debentures	$	465,812			$	458,209

___________________

(1) Denomination is in Euros with a value of €25.8 million.

(2) Amount represents the fair value adjustment on trust preferred securities assumed in acquisitions.

Interest payments made by the Company on subordinated debentures are considered dividend payments under FRB regulations. Bank holding companies, such as PacWest, are required to notify and receive approval from 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. We may not pay a dividend if the FRB objects or until such time as we receive approval from the FRB or we no longer need to provide notice under applicable regulations. Since the impact of the goodwill impairment charge on net earnings in the first quarter of 2020, we are required to receive approval from the FRB prior to declaring a dividend until such time the applicable regulations no longer require such approval.