NOTE 5 - SUBORDINATED NOTES

9 Months Ended

Sep. 30, 2020

SUBORDINATED NOTES

SUBORDINATED NOTES

NOTE 5 – SUBORDINATED NOTES

On September 14, 2020, the Company completed a private offering of $50.0 million in aggregate principal amount of fixed-to-floating subordinated notes that mature on September 15, 2030. The subordinated notes, which qualify as Tier 2 capital for the Company, will bear interest at a fixed rate of 5.125% per year, from and including September 14, 2020 to, but excluding September 15, 2025 or earlier redemption.  From and including September 15, 2025 to, but excluding the maturity date or earlier redemption date, the interest rate will reset quarterly at a variable rate, which is expected to be the then three-month Term SOFR, plus 500 basis points.  Interest on the subordinated notes is payable quarterly, commencing on December 15, 2020.  The notes are redeemable, in whole or in part, at any time upon the occurrence of certain events.  The subordinated notes may be redeemed at the Company’s option, in whole or in part, on any interest payment date on or after September 15, 2025, at a redemption price equal to 100% of the principal amount of the notes to be redeemed plus accrued and unpaid interest to, but excluding, the date of redemption.  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.

The details of the Company’s subordinated notes are as follows:

		Amount Outstanding	Interest Rate			Amount Outstanding	Interest Rate
		as of September 30, 2020	as of September 30, 2020			as of December 31, 2019	as of December 31, 2019		Maturity Date
		(dollars in thousands)
Subordinated debenture dated 9/14/20	$	50,000	5.125	%	$	-	—	%	9/15/2030
Subordinated debenture dated 2/1/19		65,000	5.375	%		65,000	5.375	%	9/15/2030
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		(1,423)				(1,606)
Total Subordinated Debentures	$	118,577			$	68,394
*Assumed in acquisition of SFCB