Borrowings and Subordinated Debentures

12 Months Ended

Dec. 31, 2022

Debt Disclosure [Abstract]

Borrowings and Subordinated Debentures

NOTE 12.  BORROWINGS AND SUBORDINATED DEBT

Borrowings

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

	December 31,
	2022				2021
			Weighted				Weighted
			Average				Average
Borrowing Type	Balance		Rate		Balance		Rate
	(Dollars in thousands)
FHLB secured advances	$	1,270,000	4.62	%	$	—	—	%
FHLB unsecured overnight advance	112,000		4.37	%	—		—	%
AFX borrowings	250,000		4.68	%	—		—	%
Credit-linked notes	132,030		14.56	%	—		—	%
Total borrowings	$	1,764,030	5.36	%	$	—	—	%

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 financing capacity with the FHLB of $5.8 billion as of December 31, 2022, collateralized by a blanket lien on $7.0 billion of qualifying loans and $2.1 billion of securities.

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

	December 31,
	2022					2021
					Maturity					Maturity
	Balance		Rate		Date	Balance		Rate		Date
	(Dollars in thousands)
Overnight advance	$	520,000	4.65	%	1/3/2023	$	—	—	%	-
Term advance	500,000		4.59	%	1/23/2023	—		—	%	-
Term advance	250,000		4.64	%	2/14/2023	—		—	%	-
Total FHLB secured advances	$	1,270,000	4.62	%		$	—	—	%

FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of December 31, 2022, the Bank had secured borrowing capacity of $2.5 billion collateralized by liens covering $3.1 billion of qualifying loans. As of December 31, 2022 and December 31, 2021, there were no balances outstanding.

FHLB Unsecured Line of Credit. The Bank has a $112.0 million unsecured line of credit with the FHLB for the purchase of overnight funds, of which there was a $112.0 million balance outstanding at December 31, 2022 and no balance outstanding at December 31, 2021.

Federal Funds Arrangements with Commercial Banks. As of December 31, 2022, the Bank had unsecured lines of credit of $180.0 million in the aggregate with several 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 December 31, 2022 and December 31, 2021, 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, 2022, the balance outstanding was $250.0 million, which consisted of $250.0 million in overnight borrowings. As of December 31, 2021, there was no balance outstanding.

Credit-Linked Notes. On September 29, 2022, the Bank completed a credit-linked notes transaction. The notes were issued and sold at par and had an aggregate principal amount of $132.8 million with net proceeds of approximately $128.7 million and are due June 27, 2052. The notes are linked to the credit risk of an approximately $2.66 billion reference pool of previously purchased single-family residential mortgage loans. Principal payments on the notes are based only on scheduled and unscheduled principal that is actually collected on these loans. The notes were issued in five classes with a blended rate on the notes of SOFR plus 11%. The transaction results in a lower risk-weighting on the reference pool of loans for regulatory capital purposes. The credit-linked notes are reported at fair value of $132.0 million at December 31, 2022. See Note 3. Restricted Cash for information regarding the collateral for the notes and Note 15. Fair Value Option for additional information.

Subordinated Debt

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

	December 31,
	2022				2021				Issue	Maturity	Rate Index
Series	Balance		Rate (1)		Balance		Rate (1)		Date	Date	(Quarterly Reset) (6)
	(Dollars in thousands)
Subordinated notes, net (2)	$	395,134	3.25	%	$	394,634	3.25	%	4/30/2021	5/1/2031	Fixed rate (3)
Trust V	10,310		7.84	%	10,310		3.32	%	8/15/2003	9/17/2033	3-month LIBOR + 3.10
Trust VI	10,310		7.82	%	10,310		3.25	%	9/3/2003	9/15/2033	3-month LIBOR + 3.05
Trust CII	5,155		7.69	%	5,155		3.17	%	9/17/2003	9/17/2033	3-month LIBOR + 2.95
Trust VII	61,856		7.16	%	61,856		2.88	%	2/5/2004	4/23/2034	3-month LIBOR + 2.75
Trust CIII	20,619		6.46	%	20,619		1.89	%	8/15/2005	9/15/2035	3-month LIBOR + 1.69
Trust FCCI	16,495		6.37	%	16,495		1.80	%	1/25/2007	3/15/2037	3-month LIBOR + 1.60
Trust FCBI	10,310		6.32	%	10,310		1.75	%	9/30/2005	12/15/2035	3-month LIBOR + 1.55
Trust CS 2005-1	82,475		6.72	%	82,475		2.15	%	11/21/2005	12/15/2035	3-month LIBOR + 1.95
Trust CS 2005-2	128,866		6.36	%	128,866		2.08	%	12/14/2005	1/30/2036	3-month LIBOR + 1.95
Trust CS 2006-1	51,545		6.36	%	51,545		2.08	%	2/22/2006	4/30/2036	3-month LIBOR + 1.95
Trust CS 2006-2	51,550		6.36	%	51,550		2.08	%	9/27/2006	10/30/2036	3-month LIBOR + 1.95
Trust CS 2006-3 (4)	27,592		3.66	%	29,306		1.49	%	9/29/2006	10/30/2036	3-month EURIBOR + 2.05
Trust CS 2006-4	16,470		6.36	%	16,470		2.08	%	12/5/2006	1/30/2037	3-month LIBOR + 1.95
Trust CS 2006-5	6,650		6.36	%	6,650		2.08	%	12/19/2006	1/30/2037	3-month LIBOR + 1.95
Trust CS 2007-2	39,177		6.36	%	39,177		2.08	%	6/13/2007	7/30/2037	3-month LIBOR + 1.95
Total subordinated debt	934,514		5.08	%	935,728		2.64	%
Acquisition discount (5)	(67,427)				(72,445)
Net subordinated debt	$	867,087			$	863,283

___________________

(1)    Rates do not include the effects of discounts and issuance costs.

(2)    Net of unamortized issuance costs of $4.9 million.

(3)    Interest rate is fixed until May 1, 2026, when it changes to a floating rate and resets quarterly at a benchmark rate plus 252 basis points.

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

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

(6)    Interest rate will default to the last published or determined rate of LIBOR, and for Trust CS 2006-4, the Base Rate, defined as the greater of Prime and the federal funds rate, upon cessation of LIBOR and effectively converting these instruments to fixed rate, if not modified prior to June 30, 2023.