Senior Subordinated Notes

12 Months Ended

Dec. 31, 2013

SeniorSubordinatedNotesAbstract

Senior Subordinated Notes

NOTE 12 Senior Subordinated Notes

During 2009, PSB issued $7,000 of Senior Subordinated Notes (the “Notes”) on a private placement basis. The Notes carried a fixed interest rate of 8.00% paid quarterly and scheduled to mature on July 1, 2019. Under current banking regulatory capital rules, the Notes qualified as Tier 2 regulatory equity capital at December 31, 2012.

During 2013, PSB elected to prepay the Notes in full with $1,000 of cash and $6,000 in proceeds from an issue of new subordinated debt. The new debt includes $4,000 of privately placed notes carrying a 3.75% fixed interest rate with interest only payments, due in 2018, and $2,000 in a fully amortizing term note with Bankers’ Bank, Madison, Wisconsin, carrying a floating rate of interest and maturing in 2015. The $4,000 of new debt is held by related parties, including directors and a significant shareholder. The $6,000 in new subordinated debt did not qualify as Tier 2 regulatory capital at December 31, 2013. Total interest expense on senior subordinated notes was $184 during 2013, $578 during 2012, and $567 during 2011. Notes held by related parties including directors, their families, or significant shareholders totaled $4,000 at December 31, 2013 and $3,250 at December 31, 2012.