Debt

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

Debt

Debt

FHLB advances:

The following is a breakdown of our FHLB advances and other borrowings outstanding as of December 31,:

	2023				2022
	Amount		Rate	Weighted Average Rate	Amount		Rate	Weighted Average Rate
Variable rate line-of-credit advance	$	389,468	5.55%	N/A	$	643,885	4.48%	N/A

The advances were collateralized by $1,674,096 and $1,630,939 of loans pledged to the FHLB as of December 31, 2023 and 2022, respectively. All FHLB advances as of December 31, 2023 consisted of overnight borrowings with a maturity of January 1, 2024.

As of December 31, 2023 and 2022, the Bank had total borrowing capacity with the FHLB that is based on qualified collateral lending values of $1,192,022 and $1,139,356, respectively. Our additional borrowing availability with the FHLB at December 31, 2023 was $706,367. These borrowings can be in the form of additional term advances or a line-of-credit.

FRB advances:

We also had a $2,028,410 line-of-credit with the FRB. The agreement bears interest at the Fed Funds target rate and is secured by municipal, agency, mortgage-related and corporate securities. The entire line was available at December 31, 2023.

Other borrowings:

We have lines-of-credit with certain other financial institutions totaling $110,000 as of December 31, 2023. No amounts were drawn on these lines-of-credit in 2023.

Convertible Notes Payable:

On August 31, 2023, the convertible notes of $5,456 matured and were repaid in full. As of December 31, 2022, we had outstanding convertible notes of $5,456. The annual interest rate on these convertible notes was 3.29% with quarterly interest payments. With respect to conversion, each $1 (in thousands) principal amount of the convertible notes was convertible to 15.6717 shares of Parent Company common stock at any time prior to maturity. The conversion feature was not exercised at maturity. Accretion expense for the years ended December 31, 2023, 2022 and 2021 was $101, $1,131 and $746, respectively.

Subordinated Debt:

Subordinated Notes - 2020:

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 years ended December 31, 2023, 2022 and 2021, the amortization associated with the debt issuance costs totaled $93, $94 and $93, respectively. Future amortization of the debt issuance costs is expected as follows:

2024	$	93
2025	93
2026	93
2027	93
2028	93
Thereafter	143
Total future amortization	$	608

Subordinated Note - 2022:

On January 13, 2022, we issued a subordinated note totaling $25,000. The note pays interest at a fixed rate of 3.375% through January 15, 2027 and subsequently, until maturity, pay interest at a floating rate of three month term SOFR plus 2.03% reset quarterly. Interest is payable on July 15 and January 15 of each year. Such note is due on January 15, 2032. The note is not redeemable within the first five years of issuance, except under certain very limited conditions. After five years, we may redeem the note at our discretion.

We incurred and capitalized $534 of costs related to the issuance of the subordinated note. As of and for the years ended December 31, 2023 and 2022 the amortization associated with the debt issuance costs totaled $54 and $51, respectively. Future amortization of the debt issuance costs is expected as follows:

2024	$	53
2025	53
2026	53
2027	53
2028	53
Thereafter	164
Total future amortization	$	429

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 (which was amended to three-month term SOFR as of June 30, 2023) plus 3.35% (8.94% and 7.02% as of December 31, 2023 and 2022, respectively) for the trust preferred securities issued through NMBCT I and at a rate of three-month LIBOR(which was amended to three-month SOFR as of June 30, 2023) plus 2.00% (7.64% and 6.69% as of December 31, 2023 and 2022, 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 years ended December 31, 2023, 2022 and 2021, accretion associated with the fair value discount totaled $286, $254 and $256, respectively. Future accretion of the valuation discount is expected as follows:

2024	$	382
2025	271
2026	241
2027	246
2028	241
Thereafter	1,189
Total future accretion	$	2,570

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.