Annual report [Section 13 and 15(d), not S-K Item 405]

Borrowings

v3.25.4
Borrowings
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Borrowings

Note 9 — Borrowings

 

Borrowings consisted of FHLB advances, which represent collateralized obligations with the FHLB. The following is a summary of contractual maturities of FHLB advances:

 

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

 

 

Outstanding
Balance

 

 

Weighted
Average
Rate

 

 

Outstanding
Balance

 

 

Weighted
Average
Rate

 

 

 

(dollars in thousands)

 

Open advances

 

$

—

 

 

 

—

 

 

$

225,000

 

 

 

4.78

%

Advances due within 12 months

 

 

150,000

 

 

 

4.02

%

 

 

—

 

 

 

—

 

Advances due over 12 months through 24 months

 

 

—

 

 

 

—

 

 

 

37,500

 

 

 

4.58

 

Advances due over 24 months through 36 months

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Outstanding advances

 

$

150,000

 

 

 

4.02

%

 

$

262,500

 

 

 

4.75

%

 

 

The following is financial data pertaining to FHLB advances:

 

 

 

As of December 31,

 

 

 

2025

 

 

2024

 

 

2023

 

 

 

(dollars in thousands)

 

Weighted-average interest rate at end of year

 

 

4.02

%

 

 

4.75

%

 

 

4.69

%

Weighted-average interest rate during the year

 

 

4.52

%

 

 

4.37

%

 

 

3.48

%

Average balance of FHLB advances

 

$

82,390

 

 

$

154,112

 

 

$

197,390

 

Maximum amount outstanding at any month-end

 

$

150,000

 

 

$

350,000

 

 

$

450,000

 

 

We have pledged loans with carrying values of $2.40 billion at December 31, 2025, as collateral with the FHLB for this borrowing facility. The total borrowing capacity available from the pledged collateral is $1.76 billion, of which $1.46 billion remained available at December 31, 2025.

 

At December 31, 2025, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window was $424.5 million, on pledged loans with carrying values of $528.1 million. At December 31, 2024, the available borrowing capacity through the Federal Reserve Bank of San Francisco Discount Window was $27.6 million on pledged securities with market values of $29.4 million. There was no balance outstanding as of December 31, 2025 and 2024.

For the years ended December 31, 2025, 2024 and 2023, interest expense on FHLB advances were $3.7 million, $6.7 million and $6.9 million, respectively, and the weighted-average interest rates were 4.52%, 4.37% and 3.48%, respectively.

Note 10 — Subordinated Debentures

On August 20, 2021, the Company issued Fixed-to-Floating Subordinated Notes (“2031 Notes”) of $110.0 million with a final maturity date of September 1, 2031. The 2031 Notes have an initial fixed interest rate of 3.75% per annum, payable semi-annually in arrears on March 1 and September 1 of each year, up to but excluding September 1, 2026. From and including September 1, 2026 and thereafter, the 2031 Notes will bear interest at a floating rate per annum equal to the Three-Month Term SOFR plus 310 basis points, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year. If the then-current three-month term SOFR rate is less than zero, the three-month SOFR will be deemed to be zero. Debt issuance cost was $2.1 million, which is being amortized through the 2031 Notes maturity date. At December 31, 2025 and 2024, the balance of the 2031 Notes included in the Company’s Consolidated Balance Sheet, net of debt issuance cost, was $108.7 million and $108.5 million, respectively. The amortization of debt issuance cost was $0.2 million for the years ended December 31, 2025, 2024 and 2023.

 

The Company issued Fixed-to-Floating Subordinated Notes (“2027 Notes”) of $100.0 million on March 21, 2017, with a final maturity on March 30, 2027. The Notes had an initial fixed interest rate of 5.45% per annum, payable semi-annually on March 30 and September 30 of each year. From and including March 30, 2022 and thereafter, the 2027 Notes bore interest at a floating rate equal to the then current three-month LIBOR, as calculated on each applicable date of determination, plus 3.32% payable quarterly. Debt issuance cost was $2.3 million, which was being amortized through the Note’s maturity date.

 

The Company assumed Junior Subordinated Deferrable Interest Debentures (“Subordinated Debentures”) as a result of an acquisition in 2014 with an unpaid principal balance of $26.8 million and an estimated fair value of $18.5 million. The $8.3 million discount is being amortized to interest expense through the debentures’ maturity date of March 15, 2036. A trust was formed in 2005, which issued $26.0 million of Trust Preferred Securities (“TPS”) at a 6.26% fixed rate for the first five years and a variable rate at the three-month LIBOR plus 140 basis points thereafter and invested the proceeds in the Subordinated Debentures. The rate on the TPS at December 31, 2025 was 5.38%. Beginning September 15, 2023, the variable rate on the TPS changed to the three-month SOFR plus approximately 166 basis points, representing a credit spread of 140 basis points and an approximate 26 basis point adjustment to convert three-month LIBOR to three-month SOFR.

 

The Company may redeem the Subordinated Debentures at an earlier date if certain conditions are met. The TPS will be subject to mandatory redemption if the Subordinated Debentures are repaid by the Company. Interest is payable quarterly, and the Company has the option to defer interest payments on the Subordinated Debentures from time to time for a period not to exceed five consecutive years. At December 31, 2025 and 2024, the balance of Subordinated Debentures included in the Company’s Consolidated Balance Sheets, net of discount of $4.3 million and $4.7 million, was $22.5 million and $22.1 million, respectively. The amortization of discount was $0.4 million for the years ended December 31, 2025, 2024 and 2023, respectively.