Note 12. Subordinated Notes

Subordinated notes as of December 31, 2019 and 2018 are summarized as follows:


		Amount Outstanding	Interest Rate			Amount Outstanding	Interest Rate
		as of December 31, 2019	as of December 31, 2019			as of December 31, 2018	as of December 31, 2018		Maturity Date
		(dollars in thousands)

Subordinated debenture dated 2/1/19	$	65,000	5.375	%	$	-	N/A	%	2/15/2029
Subordinated debenture dated 4/30/16		2,000	4.00	%		2,000	4.00	%	4/30/2026
Subordinated debenture dated 9/15/16		3,000	4.00	%		3,000	4.00	%	9/15/2026
Debt issuance costs		(1,606)				(218)
Total Subordinated Debentures	$	68,394			$	4,782

On February 12, 2019, the Company completed an underwritten public offering of $65.0 million in aggregate principal amount of fixed-to-floating subordinated notes that mature on February 15, 2029. Net proceeds, after deducting the underwriting discount and estimated expenses, were $63.4 million. The subordinated notes, which qualify as Tier 2 captial for the Company, are at a fixed rate of 5.375% per year until but excluding February 15, 2024. On this date, the interest will change to an annual floating rate equal to three-month LIBOR plus 282 basis points until the maturity date. The interest on the subordinated notes are payable semi-annually, commencing on August 15, 2019 during the five year fixed term and therafter quarterly, commencing on February 15, 2024. The subordinated notes have an optional redemption in whole or in part on any interest payment date on or after February 15, 2024. The subordinated notes are subordinate in the right of payment to the Company’s senior indebtedness and the indebtedness and other liabilities of the subsidiary banks. Unamortized debt issuance costs related to the subordinated notes totaled $1.6 million at December 31, 2019.

Immediately following the issuance, the Company repaid term notes totaling $21.3 million and the outstanding balance of $9.0 million on its revolving line of credit. The Company intends to use the remaining net proceeds from this offering for general corporate purposes, including the pursuit of opportunistic acquisitions of similar or complementary financial service organizations, repaying indebtedness, financing investments and capital expeditures, repurchasing shares of the Company’s common stock, investing in the subsidiary banks or other strategic opportunities that may arise in the future.

As part of the merger with Springfield Bancshares, the Company assumed two subordinated debentures with a fair value of $4.8 million. The interest rate on the subordinated debentures is fixed for the first five years of the term and then converts to floating for the remaining term, at a rate of Prime floating daily. The debentures may be called after a minimum of five years following issuance and at the prior approval of the appropriate regulatory agencies. These subordinated debentures are unsecured.