v3.26.1
Subordinated Notes and Other Borrowings
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Subordinated Notes and Other Borrowings Subordinated Notes and Other Borrowings
Subordinated notes: On August 17, 2022, the Company completed a private placement of $75.0 million of fixed-to-floating rate subordinated notes to certain qualified investors, of which $19.3 million was purchased by existing or former members of the board of directors and their affiliates. The notes will be used for capital management and general corporate purposes, including, without limitation, the redemption of existing subordinated notes. The subordinated notes have a maturity date of September 1, 2032 and bear interest, payable semi-annually, at the rate of 6.00% per annum until September 1, 2027. On that date, the interest rate will be adjusted to float at a rate equal to the three-month Term SOFR plus 329.0 basis points (7.02% as of June 30, 2026) until maturity. The notes include a right of prepayment, on or after August 17, 2027 or, in certain limited circumstances, before that date. The indebtedness evidenced by the subordinated notes, including principal and interest, is unsecured and subordinate and junior in right to payment to general and secured creditors and depositors of the Company.
The subordinated notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. Eligible amounts will be phased out by 20% per year beginning five years before the maturity date of the notes. Debt issuance costs incurred in conjunction with the notes were $1.5 million, of which $0.6 million has been amortized as of June 30, 2026. The Company reflects debt issuance costs as a direct deduction from the face of the note. The debt issuance costs are amortized into interest expense through the maturity period. At June 30, 2026 and December 31, 2025, the carrying value of the Company’s subordinated notes outstanding was $74.1 million and $74.0 million, respectively.
Other borrowings: The Company entered into an agreement with the FHLB which granted the FHLB a blanket lien on certain loans receivable as collateral for a borrowing line. The Company’s total financing availability is based on the dollar volume of qualifying loan collateral. The Company’s total financing availability with the FHLB is decreased by outstanding borrowings and letters of credit (“LCs”) issued on behalf of the Company, as shown in Table 6.1.
Table 6.1: Financing Availability with the FHLB
(in thousands)June 30, 2026December 31, 2025
Total financing ability from the FHLB$1,629,065 $1,518,680 
Less: outstanding borrowings— — 
Less: LCs pledged to secure State of California deposits272,500 312,500 
Less: LCs pledged to secure local agency deposits1,025,000 575,000 
Total LCs issued1,297,500 887,500 
Available borrowing capacity with the FHLB$331,565 $631,180 
As of June 30, 2026 and December 31, 2025, the Company had the ability to borrow from the Federal Reserve Discount Window. The borrowings were available at an interest rate of 3.75% as of June 30, 2026. At June 30, 2026 and December 31, 2025, the borrowing capacity under this arrangement was $1.1 billion and $957.4 million, respectively.
There were no amounts outstanding at June 30, 2026 or December 31, 2025. The borrowing line is secured by certain liens on the Company’s loans and certain available-for-sale securities.
At June 30, 2026 and December 31, 2025, the Company had five unsecured federal funds lines of credit totaling $185.0 million with five of its correspondent banks. The borrowings were available at interest rates ranging from 3.75% to 4.95% as of June 30, 2026. There were no amounts outstanding at June 30, 2026 or December 31, 2025.