COLDWATER, Mich., April 16, 2021 (News) — Southern Michigan Bancorp, Inc. (OTC Pink: SOMC ) (“Southern”), the holding company for Southern Michigan Bank & Trust (the “Bank”), today announced that it has completed the private placement of $30 million in fixed-to-floating rate subordinated notes due April 16, 2031 (the “Notes”) 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 (“SOFR”) 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, LLC 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, Inc.
Southern Michigan Bancorp, Inc. 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.
This press release contains forward-looking statements about the offering. Forward-looking statements include statements regarding anticipated future events and can be identified by the fact that they do not relate strictly to historical or current facts. They often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements, by their nature, are subject to risks and uncertainties. Certain factors that could cause actual results to differ materially from expected results include the continuing COVID-19 pandemic, increased competitive pressures, changes in the interest rate environment, general economic conditions or conditions within the securities markets, and legislative and regulatory changes that could adversely affect the business in which Southern and the Bank are engaged.
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