XML 30 R18.htm IDEA: XBRL DOCUMENT v3.22.4
Long Term Debt and Other Borrowings
 12 Months Ended
Dec. 31, 2022
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 $75,000,000 of fixed-to-floating rate subordinated notes to certain qualified investors, of which $19,250,000 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 previously 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 Secured Overnight Financing Rate plus 329.0 basis points (8.03% as of December 31, 2022) 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.
On November 5, 2022, the Company exercised its right of redemption on subordinated notes issued in two series: $3,750,000 aggregate principal amount originally issued in 2019, and $25,000,000 aggregate principal amount originally issued in 2017. On December 15, 2022, the subordinated notes were redeemed for cash by the Company at 100% of their principal amount, plus accrued and unpaid interest, in accordance with the subordinated note purchase agreements applicable to each series. Remaining unamortized deferred financing costs associated with such notes were expensed and included in other operating expenses on the consolidated statements of income.
The subordinated notes have been structured to qualify as Tier 2 capital for regulatory capital purposes. Debt issuance costs incurred in conjunction with the notes were $1,454,000, of which $61,000 has been amortized through December 31, 2022. 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 December 31, 2022 and 2021, the Company’s subordinated debt carrying value was $73,606,000 and $28,386,000, respectively.
Other borrowings: The Company has an agreement with the FHLB that granted the FHLB a blanket lien on all loans receivable (except for construction and agricultural loans) as collateral for a borrowing line. Based on the dollar volume of qualifying loan collateral, the Company had a total financing availability of $1,002,838,000 at December 31, 2022 and $696,285,000 at December 31, 2021. At December 31, 2022, the Company had outstanding borrowings of $100,000,000 and no borrowings outstanding at December 31, 2021. As of December 31, 2022 and 2021, the Company had letters of credit issued on its behalf totaling $686,500,000 and $420,500,000, respectively, as discussed below.
As of December 31, 2022, letters of credit totaling $206,500,000 were pledged to secure State of California deposits and $480,000,000 were pledged to secure local agency deposits. As of December 31, 2021, letters of credit totaling $80,500,000 were pledged to secure State of California deposits and $340,000,000 were pledged to secure local agency
deposits. The letters of credit issued and outstanding borrowings reduced the Company’s available borrowing capacity to $216,338,000 and $275,785,000 as of December 31, 2022 and 2021, respectively.
At December 31, 2022, the Company had seven unsecured federal funds lines of credit totaling $190,000,000 with seven of its correspondent banks, respectively. At December 31, 2021, the Company had five unsecured federal funds lines of credit totaling $150,000,000 with five of its correspondent banks, respectively. There were no amounts outstanding at December 31, 2022 and 2021.
At December 31, 2022 and 2021, the Company had the ability to borrow from the Federal Reserve Discount Window. At December 31, 2022 and 2021, the borrowing capacity under this arrangement was $21,868,000 and $16,999,000, respectively. There were no amounts outstanding at December 31, 2022 and 2021. The borrowing line is secured by liens on the Company’s construction and agricultural loan portfolios.