Borrowing Arrangements

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Borrowing Arrangements

4. BORROWING ARRANGEMENTS

The Company has a borrowing arrangement with the Federal Reserve Bank of San Francisco (FRB) under which advances are secured by portions of the Bank’s loan and investment securities portfolios. The Company’s credit limit varies according to the amount and composition of the assets pledged as collateral. At June 30, 2023, amounts pledged and available borrowing capacity under such limits were approximately $434.4 million and $344.8 million, respectively. At December 31, 2022, amounts pledged and available borrowing capacity under such limits were approximately $484.1 million and $393.0 million, respectively.

The Company has a borrowing arrangement with the Federal Home Loan Bank (FHLB) under which advances are secured by portions of the Bank’s loan portfolio. The Company’s credit limit varies according to its total assets and the amount and composition of the loan portfolio pledged as collateral. At June 30, 2023, amounts pledged and available borrowing capacity under such limits were approximately $451.3 million and $411.3 million, respectively. At December 31, 2022, amounts pledged and available borrowing capacity under such limits were approximately $386.1 million and $335.1 million, respectively. In March 2023, the Company secured a $25.0 million FHLB short term borrowing maturing on April 3, 2023 at a fixed rate of 5.11%. This FHLB short term borrowing was paid in full at maturity. Also, in March 2023, the Company secured a $50.0 million FHLB short term borrowing maturing on May 1, 2023 at a fixed rate of 5.02%. This FHLB short term borrowing was paid in full at maturity.

Under Federal Funds line of credit agreements with several correspondent banks, the Company can borrow up to $98.0 million. There were no borrowings outstanding under these arrangements at June 30, 2023 and December 31, 2022.

The Company maintains a revolving line of credit with a commitment of $3.0 million for a six-month term at a rate of Prime plus 0.40%. At June 30, 2023 and December 31, 2022, no borrowings were outstanding under this line of credit.

The Company entered into a three-year borrowing arrangement with a correspondent bank on April 27, 2020 for $12.0 million. The note is secured by the Company’s investment in the Bank and has a fixed rate of 3.95%. There were no borrowings outstanding under this arrangement at June 30, 2023 and December 31, 2022.

The Company issued $20.0 million in subordinated debt on September 30, 2020. The subordinated debt has a fixed interest rate of 5.00% for the first 5 years and a stated maturity of September 30, 2030. After the fifth year, the interest rate changes to a quarterly variable rate equal to then current three-month term SOFR plus 0.488%. The subordinated debt was recorded net of related issuance costs of $300,000. At June 30, 2023 and December 31, 2022, the balance remained at $20.0 million, net of the remaining unamortized issuance cost.

The Company issued an additional $35.0 million in subordinated debt on August 17, 2021. The subordinated debt has a fixed interest rate of 3.50% for the first 5 years and a stated maturity of September 1, 2031. After the fifth year, the interest rate changes to a quarterly variable rate equal to then current three-month term SOFR plus 0.286%. The subordinated debt was recorded net of related issuance costs of $760,000. At June 30, 2023 and December 31, 2022, the balance remained at $35.0 million, net of the remaining unamortized issuance cost.