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Borrowings and Subordinated Debentures
 9 Months Ended
Sep. 30, 2023
Debt Disclosure [Abstract]  
Borrowings and Subordinated Debentures BORROWINGS AND SUBORDINATED DEBT
Borrowings
The following table summarizes our borrowings as of the dates indicated:
September 30, 2023December 31, 2022
WeightedWeighted
AverageAverage
BalanceRateBalanceRate
(Dollars in thousands)
Bank Term Funding Program$4,910,000 4.38 %$— — %
Repurchase agreement (1)
1,260,743 8.50 %— — %
Credit-linked notes123,782 16.00 %132,030 14.56 %
FHLB secured advances— — %1,270,000 4.62 %
AFX short-term borrowings— — %250,000 4.68 %
FHLB unsecured overnight advance— — %112,000 4.37 %
Total borrowings$6,294,525 5.43 %$1,764,030 5.36 %
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(1)    Balance is net of unamortized issuance costs of $10.9 million and $4.8 million of accrued exit fees. Rate calculation does not include the effects of issuance costs and exit fees.
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 as of September 30, 2023 of $4.3 billion, collateralized by a blanket lien on $8.5 billion of qualifying loans and $18.4 million of securities. As of September 30, 2023, there were no balances outstanding. As of December 31, 2022, the balance outstanding was $1.3 billion, which consisted of an overnight advance and two term advances with maturity dates of January 2023 and February 2023.
FRBSF Secured Line of Credit. The Bank has a secured line of credit with the FRBSF. As of September 30, 2023, the Bank had secured borrowing capacity of $6.5 billion collateralized by liens covering $6.8 billion of qualifying loans and $1.5 billion of securities. As of September 30, 2023 and December 31, 2022, there were no balances outstanding.
FRBSF Bank Term Funding Program. In March of 2023, the Bank participated in the FRBSF Bank Term Funding Program. As of September 30, 2023, the Bank had secured borrowing capacity of $4.9 billion collateralized by the par value of pledged securities totaling $4.9 billion. As of September 30, 2023, the balance outstanding was $4.9 billion consisting of two term advances maturing in March 2024.
Repurchase Agreement. In March of 2023, the Bank entered into a repurchase agreement through which it borrowed $1.4 billion that was collateralized by loans with a principal balance of $2.1 billion. In connection with this borrowing, the Bank incurred $17.9 million of issuance costs and accrued $0.4 million in exit fees. The repurchase agreement is to be repaid with collections on the underlying loans. The repurchase agreement has a term of 18 months, under which the interest rate is 8.50% for amounts outstanding during the first nine months and 8.75% for amounts outstanding during the last nine months. The Bank has the option to pay off the repurchase agreement after the first nine months. Per the terms of the agreement, a reserve account equal to 1.5% of the facility commitment amount was deposited with a third-party bank to be used for certain purposes. Any remaining funds will be returned to PacWest at the time of payoff or maturity of the facility. At September 30, 2023, the borrowing amount outstanding was $1.3 billion collateralized by loans with a principal balance of $2.0 billion.
Credit-Linked Notes. The notes were issued in five classes, each with an interest rate of SOFR plus a spread that ranges from 8.00% to 13.25%, with a weighted average spread of 10.68% at September 30, 2023. The notes are linked to the credit risk of an approximately $2.51 billion reference pool of previously purchased single-family residential mortgage loans at September 30, 2023. The notes are due June 27, 2052. Principal payments on the notes are based only on scheduled and unscheduled principal that is actually collected on these loans. The notes are reported at fair value of $123.8 million at September 30, 2023. See Note 12. Fair Value Option for additional information.
Federal Funds Arrangements with Commercial Banks. As of September 30, 2023, the Bank had unsecured lines of credit of $100.0 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 September 30, 2023 and December 31, 2022, 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 September 30, 2023, there was no balance outstanding. As of December 31, 2022, the balance outstanding was $250.0 million, which consisted of $250.0 million in overnight borrowings.
Subordinated Debt
The following table summarizes the terms of each issuance of subordinated debt outstanding as of the dates indicated:
September 30, 2023December 31, 2022DateMaturityRate Index
SeriesBalance
Rate (1)
Balance
Rate (1)
IssuedDate
(Quarterly Reset) (6)
(Dollars in thousands)
Subordinated notes, net (2)
$395,520 3.25 %$395,134 3.25 %4/30/20215/1/2031
Fixed rate (3)
Trust V10,310 8.77 %10,310 7.84 %8/15/20039/17/2033
3-month Term SOFR + 3.10
Trust VI10,310 8.72 %10,310 7.82 %9/3/20039/15/2033
3-month Term SOFR + 3.05
Trust CII5,155 8.62 %5,155 7.69 %9/17/20039/17/2033
3-month Term SOFR + 2.95
Trust VII61,856 8.38 %61,856 7.16 %2/5/20044/23/2034
3-month Term SOFR + 2.75
Trust CIII20,619 7.36 %20,619 6.46 %8/15/20059/15/2035
3-month Term SOFR + 1.69
Trust FCCI16,495 7.27 %16,495 6.37 %1/25/20073/15/2037
3-month Term SOFR + 1.60
Trust FCBI10,310 7.22 %10,310 6.32 %9/30/200512/15/2035
3-month Term SOFR + 1.55
Trust CS 2005-182,475 7.62 %82,475 6.72 %11/21/200512/15/2035
3-month Term SOFR + 1.95
Trust CS 2005-2128,866 7.58 %128,866 6.36 %12/14/20051/30/2036
3-month Term SOFR + 1.95
Trust CS 2006-151,545 10.45 %51,545 6.36 %2/22/20064/30/2036
Prime + 1.95
Trust CS 2006-251,550 7.58 %51,550 6.36 %9/27/200610/30/2036
3-month Term SOFR + 1.95
Trust CS 2006-3 (4)
27,252 5.76 %27,592 3.66 %9/29/200610/30/2036
3-month EURIBOR + 2.05
Trust CS 2006-4 16,470 10.45 %16,470 6.36 %12/5/20061/30/2037
Prime + 1.95
Trust CS 2006-5 6,650 7.58 %6,650 6.36 %12/19/20061/30/2037
3-month Term SOFR + 1.95
Trust CS 2007-239,177 7.58 %39,177 6.36 %6/13/20077/30/2037
3-month Term SOFR + 1.95
Total subordinated debt934,560 5.96 %934,514 5.08 %
Acquisition discount (5)
(63,664)(67,427)
Net subordinated debt$870,896 $867,087 
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(1)    Rates do not include the effects of discounts and issuance costs.
(2)    Net of unamortized issuance costs of $4.5 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)    On July 1, 2023, interest rates transitioned to Term SOFR or Prime plus the relevant spread adjustment as the applicable benchmark upon the cessation of LIBOR on June 30, 2023.