Junior Subordinated Debentures

9 Months Ended

Sep. 30, 2019

Junior Subordinated Debentures

Junior Subordinated Debentures

NOTE (7) – Junior Subordinated Debentures

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures (the “Debentures”) in a private placement to a trust that was capitalized to purchase subordinated debt and preferred stock of multiple community banks.  Interest on the Debentures is payable quarterly at a rate per annum equal to the 3-Month LIBOR plus 2.54%. The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 4.68% at September 30, 2019. On October 16, 2014, the Company made payments of $900 thousand of principal on Debentures, executed a Supplemental Indenture for the Debentures that extended the maturity of the Debentures to March 17, 2024, and modified the payment terms of the remaining $5.1 million principal amount thereof. The modified terms of the Debentures require quarterly payments of interest only through March 2019 at the original rate of 3-Month LIBOR plus 2.54%. Starting in June 2019, quarterly principal payments of $255 thousand are required until the Debentures are fully repaid on March 17, 2024.  The Debentures may be called for redemption at any time by the Company. For the nine months ended September 30, 2019, the Company made $510 thousand principal payments. The remaining principal balance of the debentures was $4.6 million as of September 30, 2019.