WAREHOUSE NOTES PAYABLE

9 Months Ended

Sep. 30, 2022

WAREHOUSE NOTES PAYABLE

Warehouse Notes Payable

NOTE 6—WAREHOUSE NOTES PAYABLE

As of September 30, 2022, to provide financing to borrowers under the Agencies’ programs, the Company has committed and uncommitted warehouse lines of credit in the amount of $3.9 billion with certain national banks and a $1.5 billion uncommitted facility with Fannie Mae (collectively, the “Agency Warehouse Facilities”). In support of these Agency Warehouse Facilities, the Company has pledged substantially all of its loans held for sale under the Company’s approved programs. The Company’s ability to originate mortgage loans for sale depends upon its ability to secure and maintain these types of financings on acceptable terms.

Additionally, as of September 30, 2022, the Company has arranged for warehouse lines of credit in the amount of $0.5 billion with certain national banks to assist in funding loans held for investment under the Interim Loan Program (“Interim Warehouse Facilities”). The Company has pledged substantially all of its loans held for investment against these Interim Warehouse Facilities. The Company’s ability to originate loans held for investment depends upon its ability to secure and maintain these types of financings on acceptable terms.  

The Company also has a warehouse line of credit in the amount of $30.0 million with a national bank to assist in funding the Company’s Committed investments in tax credit equity before transferring them to a tax credit fund (“Tax Credit Equity Warehouse Facility”).

The maximum amount and outstanding borrowings under Warehouse notes payable at September 30, 2022:

	September 30, 2022
(dollars in thousands)	Committed		Uncommitted		Total Facility		Outstanding
Facility	Amount		Amount		Capacity		Balance		Interest rate(1)
Agency Warehouse Facility #1	$	325,000	$	250,000	$	575,000	$	147,070	Adjusted Term SOFR plus 1.30%
Agency Warehouse Facility #2		700,000		300,000		1,000,000		536,956	Adjusted Term SOFR plus 1.30%
Agency Warehouse Facility #3		600,000		265,000		865,000		420,585	Adjusted Term SOFR plus 1.35%
Agency Warehouse Facility #4		200,000		225,000		425,000		92,924	Adjusted Term SOFR plus 1.30%
Agency Warehouse Facility #5		—		1,000,000		1,000,000		652,773	Adjusted Term SOFR plus 1.45%
Total National Bank Agency Warehouse Facilities	$	1,825,000	$	2,040,000	$	3,865,000	$	1,850,308
Fannie Mae repurchase agreement, uncommitted line and open maturity		—		1,500,000		1,500,000		507,412
Total Agency Warehouse Facilities	$	1,825,000	$	3,540,000	$	5,365,000	$	2,357,720
Interim Warehouse Facility #1	$	135,000	$	—	$	135,000	$	—	Adjusted Term SOFR plus 1.80%
Interim Warehouse Facility #2		100,000		—		100,000		—	Adjusted Term SOFR plus 1.35% to 1.85%
Interim Warehouse Facility #3		200,000		—		200,000		163,468	30-day LIBOR plus 1.75% to 3.25%
Interim Warehouse Facility #4		19,810		—		19,810		19,810	30-day LIBOR plus 3.00%
Total National Bank Interim Warehouse Facilities	$	454,810	$	—	$	454,810	$	183,278
Tax Credit Equity Warehouse Facility	$	30,000	$	—	$	30,000	$	5,300	Adjusted Daily SOFR plus 3.00%
Debt issuance costs		—		—		—		(892)
Total warehouse facilities	$	2,309,810	$	3,540,000	$	5,849,810	$	2,545,406

(1) Interest rate presented does not include the effect of any applicable interest rate floors.

During 2022, the following amendments to the Warehouse Facilities were executed in the normal course of business to support the growth of the Company’s business.  

Agency Warehouse Facilities

During the third quarter of 2022, at the Company’s request, an amendment to Agency Warehouse Facility #1 was executed that decreased the committed borrowing capacity from $425.0 million to $325.0 million. In addition to the change in committed borrowing capacity, the amendment added $250 million of uncommitted borrowing capacity and extended the maturity date to August 30, 2023. No other material modifications have been made to the agreement during 2022.

During the second quarter of 2022, the Company executed an amendment to Agency Warehouse Facility #2 that extended the maturity date to April 13, 2023 and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 130 basis points. No other material modifications have been made to the agreement during 2022.

During the second quarter of 2022, the Company executed an amendment related to Agency Warehouse Facility #3 that extended the maturity date to May 15, 2023 and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 135 basis points with an Adjusted Term SOFR floor of 15 basis points. No other material modifications have been made to the agreement during 2022.

During the second quarter of 2022, the Company executed an amendment related to Agency Warehouse Facility #4 that extended the maturity date to June 22, 2023, increased the total borrowing capacity to $425.0 million from $350.0 million, and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 130 basis points. No other material modifications have been made to the agreement during 2022.

During the third quarter of 2022, the Company executed an amendment related to Agency Warehouse Facility #5 that extended the maturity date to September 14, 2023. No other material modifications have been made to the agreement during 2022.

During the third quarter of 2022, the Company allowed an agency warehouse facility to mature on September 29, 2022, as the Company believed it had sufficient borrowing capacity from the other warehouse lenders.

Interim Warehouse Facilities

During the second quarter of 2022, the Company executed an amendment related to Interim Warehouse Facility #1 that extended the maturity date to May 15, 2023 and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 180 basis points. No other material modifications have been made to the agreement during 2022.

During the first quarter of 2022, the Company executed an amendment related to Interim Warehouse Facility #2 that extended the maturity date to December 13, 2023 and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 135 to 185 basis points. No other material modifications have been made to the agreement during 2022.

During the third quarter of 2022, the Company executed an amendment related to Interim Warehouse Facility #3 that extended the maturity date to September 29, 2023. No other material modifications have been made to the agreement during 2022.

During the fourth quarter of 2022, the Company executed an amendment related to Interim Warehouse Facility #4 that extended the maturity date to October 1, 2024 and transitioned the interest rate from 30-day LIBOR to Adjusted Term SOFR plus 311 basis points with an Adjusted Term SOFR floor of 15 basis points. No other material modifications have been made to the agreement during 2022.

Tax Credit Equity Warehouse Facility

During the third quarter of 2022, the Company executed amendments related to the Tax Credit Equity Warehouse Facility that extended the maturity date to October 14, 2022. Additionally, the amendments transitioned the interest rate from Daily LIBOR plus 300 basis points to Adjusted Daily SOFR plus 300 basis points, with a SOFR floor of 150 basis points. During October 2022, the Company allowed the Tax Credit Equity Warehouse Facility to mature according to the terms of the agreement.

In October 2022, the Company, through one of its wholly-owned subsidiaries, replaced the maturing Tax Credit Equity Warehouse Facility with a new warehouse facility with a national bank. The credit agreement is scheduled to mature on October 5, 2025. The facility provides the Company with up to $20.0 million in committed borrowing capacity to fund investments in affordable housing limited partnerships that also secure the borrowings. Borrowings under this facility bear interest at the Adjusted Term SOFR plus 280 basis points, with a SOFR floor of zero basis points.

The credit agreement requires the Company to abide by the following financial covenants:

● tangible net worth of the Company of not less than (i) $30.0 million;

● liquid assets of the Company of not less than $15.0 million.

The warehouse notes payable are subject to various financial covenants, all of which the Company was in compliance with as of September 30, 2022. Interest on the Company’s warehouse notes payable is based on 30-day LIBOR, Adjusted Term SOFR, or Adjusted Daily SOFR. As a result of the expected transition from LIBOR, the Company has transitioned all of its debt agreements to a SOFR based benchmark or has included fallback language to govern the transition from 30-day LIBOR to an alternative reference rate.