COLDWATER, Mich., April 16, 2021 (GLOBE NEWSWIRE) — Southern Michigan Bancorp the holding company for Southern Michigan Bank & Trust today announced that it has completed the private placement of $30 million in fixed-to-floating rate subordinated notes due April 16, 2031 to certain qualified institutional buyers and accredited investors. Southern intends to use the net proceeds from this placement for retirement of existing debt, support organic growth, and for general corporate purposes.
The Notes have been structured to qualify as Tier 2 capital for Southern for regulatory purposes and will bear interest at a fixed rate of 3.75% per annum until April 16, 2026. For the remainder of the term, the subordinated notes, which mature on April 16, 2031, will bear interest at a rate equal to 3-month Secured Overnight Financing Rate plus 302 basis points. The subordinated notes are redeemable by the Company at its option, in whole or in part, on or after June 30, 2026, or in whole or in part from time to time under certain other circumstances.
Chairman and Chief Executive Officer John H. Castle stated, “We are extremely pleased to announce the successful completion of this transaction. The tax-deductible nature of the instrument, combined with a low-interest rate and without the dilutive impact of issuing new shares of stock, makes the overall cost of capital quite attractive. The proceeds will allow us to retire existing debt and provide additional funds for continued growth.”
Performance Trust Capital Partners, served as the sole placement agent for the offering. Warner Norcross & Judd LLP served as legal counsel to the Company, and Hunton Andrews Kurth LLP served as legal counsel to the placement agent.
About Southern Michigan Bancorp
Southern Michigan Bancorp is a bank holding company and the parent company of Southern Michigan Bank & Trust. It operates 13 branches within Branch, Calhoun, Hillsdale, Kalamazoo, and St. Joseph Counties, providing a broad range of consumer, business and wealth management services throughout the region.
As of December 31, 2020, Southern had total assets of $997.6 million, total deposits of $838.3 million, and total equity of $93.0 million.