Debt

9 Months Ended

Sep. 30, 2021

Debt Disclosure [Abstract]

Debt

Debt

FHLB advances:

The following is a breakdown of our FHLB advances and other borrowings outstanding as of:

	September 30, 2021				December 31, 2020
	Amount		Rate	Weighted Average Rate	Amount		Rate	Weighted Average Rate
Variable rate line-of-credit advance	$	—	N/A	N/A	$	20,000	0.35%	N/A
Fixed rate term advances	$	40,000	0.91% - 2.59%	1.49%	$	50,411	0.91% - 4.13%	1.78%
	$	40,000			$	70,411

The advances were collateralized by $842,678 and $943,376 of loans pledged to the FHLB as collateral as of September 30, 2021 and December 31, 2020, respectively.

Future maturities of our FHLB borrowings is as follows:

2022	$	10,000
2025	20,000
Thereafter	10,000
Total	$	40,000

As of September 30, 2021 and December 31, 2020, the Bank had total borrowing capacity with the FHLB that is based on qualified collateral lending values of $675,641 and $702,540, respectively. Our additional borrowing availability with the FHLB at September 30, 2021 was $556,547. These borrowings can be in the form of additional term advances or a line-of-credit.

FRB advances:

We also had a $9,366 line-of-credit with the FRB. The agreement bears interest at the Fed Funds target rate plus 0.50% and is secured by municipal, agency, mortgage-related and corporate securities. The entire line was available at September 30, 2021.

Other borrowings:

We have lines-of-credit with certain other financial institutions totaling $95,000 as of September 30, 2021. No amounts were drawn on these lines-of-credit in 2021.

Convertible Notes Payable:

We have issued a total of $20,673 of convertible notes with a maturity date of August 31, 2023. The annual interest rate on these convertible notes is 3.29% with quarterly interest payments. With respect to conversion, each $1 (in thousands) principal amount of the convertible notes can be converted to 15.6717 shares of Parent Company common stock at any time until maturity.

The convertible notes were originally recorded with a discount of $4,682. As of and for the periods ended September 30, 2021 and December 31, 2020, the debt discount on the convertible notes totaled $1,418 and $1,977, respectively. The related accretion for the three months ended September 30, 2021 and 2020 was $186 and $188, respectively. The related accretion for the nine months ended September 30, 2021 and 2020 was $559 and $564, respectively.

Subordinated Debt:

Subordinated Notes:

In June and August 2020, we issued a total of $40,000 subordinated notes. The notes pay interest at a fixed rate of 6.00% through June 30, 2025 and subsequently, until maturity, pay interest at a floating rate of three month term SOFR plus 5.89% reset quarterly. Interest is payable on July 1 and January 1 of each year. Such notes are due on July 1, 2030. The notes are not redeemable within the first five years of issuance, except under certain very limited conditions. After five years, we may redeem the notes at our discretion.

We incurred and capitalized $933 of costs related to the issuance of the subordinated notes. As of and for the three and nine months ended September 30, 2021, the amortization associated with the debt issuance costs totaled $23 and $70.

Trust preferred securities:

We have issued $9,279 in trust preferred securities through a special-purpose trust, New Mexico Banquest Capital Trust I (“NMBCT I”). In addition, we have issued $4,640 in trust preferred securities through a special purpose trust, New Mexico Banquest Capital Trust II (“NMBCT II”, and together with NMBCT I, collectively referred to as “NMBCT Trusts”). Interest is payable quarterly at a rate of three-month LIBOR plus 3.35% (3.50% and 3.66% as of September 30, 2021 and 2020, respectively) for the trust preferred securities issued through NMBCT I and at a rate of three-month LIBOR plus 2.00% (2.15% and 2.36% as of September 30, 2021 and 2020, respectively) for the trust preferred securities issued through NMBCT II.

This subordinated debt of $13,919 was originally recorded at a discount of $4,293. As of and for the three months ended September 30, 2021 and 2020, accretion associated with the fair value discount totaled $63, respectively. As of and for the nine months ended September 30, 2021 and 2020, accretion associated with the fair value discount totaled $192, respectively.

The Parent Company fully and unconditionally guarantees the obligations of the NMBCT Trusts on a subordinated basis. The trust preferred securities issued through the NMBCT Trusts are mandatorily redeemable upon the maturity of the debentures on December 19, 2032 and November 23, 2034, respectively, and are optionally redeemable, in part or in whole, by the Parent Company at each quarterly interest payment date. The Parent Company owns all of the outstanding common securities of the NMBCT Trusts, which have an aggregate liquidation valuation amount of $419 and is recorded in prepaid expenses and other assets on the consolidated balance sheet. The NMBCT Trusts are considered variable interest entities. Since the Parent Company is not the primary beneficiary of the NMBCT Trusts, the financial statements of the NMBCT Trusts are not included in our consolidated financial statements.