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Borrowings and Subordinated Debentures
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Borrowings and Subordinated Debentures NOTE 11.  BORROWINGS AND SUBORDINATED DEBT
Borrowings
The following table summarizes our borrowings as of the dates indicated:
December 31,
20232022
WeightedWeighted
AverageAverage
Borrowing TypeBalanceRateBalanceRate
(Dollars in thousands)
Bank Term Funding Program$2,618,300 4.37 %$— — %
Senior notes174,000 5.25 %— — %
Credit-linked notes123,116 16.02 %132,030 14.56 %
FHLB secured advances— — %1,270,000 4.62 %
AFX borrowings— — %250,000 4.68 %
FHLB unsecured overnight advance— — %112,000 4.37 %
Total borrowings2,915,416 4.92 %1,764,030 5.36 %
Acquisition discount on senior notes(4,094)— 
Total borrowings, net$2,911,322 $1,764,030 
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 $5.3 billion as of December 31, 2023, collateralized by a blanket lien on $9.5 billion of qualifying loans and $20.3 million of securities. As of December 31, 2023, there were $243.8 million in letters of credit pledged but 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 December 31, 2023, the Bank had secured borrowing capacity of $6.9 billion collateralized by liens covering $7.7 billion of qualifying loans and $1.3 billion of securities. As of December 31, 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 December 31, 2023, the Bank had secured borrowing capacity of $2.6 billion collateralized by the par value of pledged securities totaling $2.6 billion. As of December 31, 2023, the balance outstanding was $2.6 billion consisting of two term advances maturing in March 2024.
Federal Funds Arrangements with Commercial Banks. As of December 31, 2023, the Bank had unsecured lines of credit of $290.0 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, 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 December 31, 2023, the were no balances outstanding. As of December 31, 2022, there was a $250.0 million balance outstanding.
Senior Notes. The Senior Notes are unsecured debt obligations and rank equally with our other present and future unsecured unsubordinated obligations. We make interest payments on the Senior Notes semi-annually in arrears. We have the option to redeem the Senior Notes either in whole or in part on or after January 15, 2025 (i.e., 90 days prior to the maturity date). Notification of no less than 30 nor more than 60 days is required for redemption. The Senior Notes will be redeemable at a price equal to 100% of the principal amount of the Senior Notes to be redeemed plus accrued and unpaid interest to the date of redemption.
Credit-Linked Notes. On September 29, 2022, legacy Pacific Western 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 $2.48 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 $123.1 million at December 31, 2023. See Note 3. Restricted Cash for information regarding the collateral for the notes and Note 14. Fair Value Option for additional information.
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. The repurchase agreement was to be repaid with collections on the underlying loans. The repurchase agreement had a term of 18 months, under which the interest rate was 8.50% for amounts outstanding during the first nine months and 8.75% for amounts outstanding during the last nine months. The Bank exercised its option to pay off the repurchase agreement after the first nine months and paid off the entire balance in December 2023.
Subordinated Debt
The following table summarizes the terms of each issuance of subordinated debt outstanding as of the dates indicated:
December 31,
20232022IssueMaturityRate Index
SeriesBalance
Rate (1)
Balance
Rate (1)
DateDate
(Quarterly Reset) (6)
(Dollars in thousands)
Subordinated notes, net (2)
$380,651 3.25 %$395,134 3.25 %4/30/20215/1/2031
Fixed rate (3)
Subordinated notes75,000 4.375 %— — %10/30/202010/30/2030
Fixed rate (7)
Trust V10,310 8.74 %10,310 7.84 %8/15/20039/17/2033
3-month Term SOFR + 3.10
Trust VI10,310 8.70 %10,310 7.82 %9/3/20039/15/2033
3-month Term SOFR + 3.05
Trust CII5,155 8.59 %5,155 7.69 %9/17/20039/17/2033
3-month Term SOFR + 2.95
Trust VII61,856 8.40 %61,856 7.16 %2/5/20044/23/2034
3-month Term SOFR + 2.75
Trust CIII20,619 7.34 %20,619 6.46 %8/15/20059/15/2035
3-month Term SOFR + 1.69
Trust FCCI16,495 7.25 %16,495 6.37 %1/25/20073/15/2037
3-month Term SOFR + 1.60
Trust FCBI10,310 7.20 %10,310 6.32 %9/30/200512/15/2035
3-month Term SOFR + 1.55
Trust CS 2005-182,475 7.60 %82,475 6.72 %11/21/200512/15/2035
3-month Term SOFR + 1.95
Trust CS 2005-2128,866 7.60 %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 7.60 %51,550 6.36 %9/27/200610/30/2036
3-month Term SOFR + 1.95
Trust CS 2006-3 (4)
28,453 6.00 %27,592 3.66 %9/29/200610/30/2036
3-month EURIBOR + 2.05
Trust CS 2006-416,470 10.45 %16,470 6.36 %12/5/20061/30/2037
Prime + 1.95
Trust CS 2006-56,650 7.60 %6,650 6.36 %12/19/20061/30/2037
3-month Term SOFR + 1.95
Trust CS 2007-239,177 7.60 %39,177 6.36 %6/13/20077/30/2037
3-month Term SOFR + 1.95
PMB Statutory Trust III7,217 9.02 %— — %9/16/20029/26/2032
3-month Term SOFR + 3.40
PMB Capital Trust III10,310 7.66 %— — %10/4/200410/8/2034
3-month Term SOFR + 2.00
Total subordinated debt1,013,419 5.93 %934,514 5.08 %
Acquisition discount (5)
(76,820)(67,427)
Net subordinated debt$936,599 $867,087 
___________________
(1)    Rates do not include the effects of discounts and issuance costs.
(2)    Net of unamortized issuance costs of $4.3 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.
(7)    Interest rate is fixed until October 30, 2025, when it changes to a floating rate equal to a benchmark rate, which is expected to be 3-month Term SOFR, plus a spread of 419.5 basis points.