The parent company of ChoiceOne Bank this week announced the completion of a private placement of $32.5 million in aggregate principal amount of 3.25% fixed-to-floating rate subordinated notes due 2031.
ChoiceOne Financial Services Inc. (Nasdaq: COFS) said on Tuesday, Sept. 7, it wrapped the notes offering, and it intends to use the net proceeds of the private placement for general corporate purposes, including support for organic growth plans, possible redemption of senior debt, common stock repurchases and support for bank-level capital ratios.
The notes will initially bear interest at a fixed interest rate of 3.25% per annum until Sept. 3, 2026, after which time, the interest rate will reset quarterly to a floating rate equal to a benchmark rate, which is expected to be the then current three-month term secured overnight financing rate (SOFR) plus 255 basis points until the notes’ maturity on Sept. 3, 2031.
The notes are redeemable by the company, in whole or in part, on or after Sept. 3, 2026, and at any time upon the occurrence of certain events. The notes have been structured to qualify as tier two capital for the company for regulatory capital purposes.
“I am very pleased with the favorable terms of our subordinated notes offering,” said Kelly Potes, CEO, ChoiceOne. “This non-dilutive capital strengthens our ability to continue to execute on our strategy to deliver long-term shareholder value while maintaining strong capital levels.”
D.A. Davidson & Co. acted as placement agent for the transaction and was represented by Hunton Andrews Kurth LLP. Warner Norcross + Judd served as legal counsel to the company.
The notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the U.S., absent registration or an applicable exemption from registration requirements. The indebtedness evidenced by the notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.
ChoiceOne Financial Services is a financial holding company and the parent corporation of ChoiceOne Bank, which was founded in 1898.
Named one of America’s Best Banks by Newsweek in November 2020, ChoiceOne operates 34 offices in Kent, Ottawa, Muskegon, Newaygo, Lapeer, St. Clair, Macomb and Sanilac counties.
The bank offers insurance and investment products through its subsidiary, ChoiceOne Insurance Agencies.
ChoiceOne had about $2.12 billion in assets as of June 30.