Peoples Financial Services Corp. has completed a private placement of $85.0 million in aggregate principal amount of 7.75% fixed-to-floating rate subordinated notes due 2035. The company intends to use the proceeds for general corporate purposes and the redemption of existing subordinated debt.
The notes will initially bear interest at a rate of 7.75% per annum from issuance until June 15, 2030, with interest during this period payable semi-annually in arrears beginning December 15, 2025. From June 15, 2030, to the stated maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to three-month term secured overnight financing rate plus 411 basis points, with interest payable quarterly in arrears beginning September 15, 2030. The notes are redeemable by the company, in whole or in part, on or after June 15, 2030, and at any time upon the occurrence of certain events.
In connection with the issuance and sale of the notes, the company entered into a registration rights agreement with the purchasers of the notes to provide for the exchange of the notes for subordinated notes that are registered under the Securities Act of 1933, with substantially the same terms as the notes.
The company's CEO, Gerard A. Champi, expressed satisfaction with the successful offering and favorable terms, attributing it to the company's position of strength following excellent execution on the merger with FNCB Bancorp, Inc.
The company’s president, Thomas P. Tulaney, highlighted the cost-effective capital issuance as a reflection of their disciplined approach to capital management, prioritizing balance sheet strength while being mindful of implications for shareholders.
Performance Trust Capital Partners, LLC acted as the sole placement agent for the notes offering, while Troutman Pepper Locke LLP served as legal counsel to the company and Luse Gorman, PC served as legal counsel to the placement agent.
The notes have not been registered under the Securities Act of 1933, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
Peoples Financial Services Corp. is the bank holding company of Peoples Security Bank and Trust Company, serving retail and commercial customers through 39 full-service community banking offices. Each office offers a comprehensive array of financial products and services to individuals, businesses, not-for-profit organizations, and government entities. Following these announcements, the company's shares moved 1.96%, and are now trading at a price of $48.49. Check out the company's full 8-K submission here.
