SUBORDINATED NOTES

12 Months Ended

Dec. 31, 2022

SUBORDINATED NOTES.

SUBORDINATED NOTES

NOTE 12 – SUBORDINATED NOTES

On September 3, 2020, the Company issued $40.0 million of fixed-to-floating rate subordinated notes that mature on September 15, 2030. The subordinated notes, which are unsecured obligations of the Company, bear a fixed interest rate of 4.50% for the first five years after issuance and thereafter bear interest at a floating rate equal to three-month SOFR, as determined on the Floating Interest Determination Date, plus 4.37%. Interest is payable semi-annually during the five year fixed rate period and quarterly during the subsequent five year floating rate period. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after September 15, 2025. If the subordinated notes are redeemed before they mature, the redemption price will be the principal amount plus any accrued but unpaid interest. The transaction resulted in debt issuance costs of $0.8 million which will be amortized over 10 years. As of December 31, 2022 and 2021, 100% of the subordinated notes qualified as Tier 2 capital.

The face value and carrying value of the subordinated notes are summarized below:

	December 31, 2022		December 31, 2021
	(dollars in thousands)
Subordinated notes, at face value	$	40,000	$	40,000
Unamortized issuance costs		(605)		(684)
Subordinated notes, at carrying value	$	39,395	$	39,316