Benzinga | Jan 24, 2022 08:10AM EST

Eagle Bancorp Montana Announces Private Placement Of Fixed-to-Floating Rate Subordinated Notes Due 2032

Eagle Bancorp Montana, Inc. (NASDAQ:EBMT) (the "Company" or "Eagle"), holding company for Opportunity Bank of Montana (the "Bank"), today announced that it has issued and sold $40 million in aggregate principal amount of its 3.50% fixed-to-floating rate subordinated notes to certain institutional accredited investors and qualified institutional buyers through a private placement offering. The subordinated notes were issued on January 21, 2022 and will mature on February 1, 2032.

The subordinated notes will bear interest at an annual fixed rate of 3.50% per annum, payable semi-annually in arrears on February 1 and August 1 of each year from August 1, 2022 to, but excluding, February 1, 2027. From and including February 1, 2027 to, but excluding, February 1, 2032 or the earlier redemption date, interest will accrue at a floating rate per annum equal to a benchmark rate, which is expected to be three-month term SOFR (as defined in the Indenture under which the subordinated notes were issued), plus a spread of 218.0 basis points, payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year.

The Company estimates that the net cash proceeds from the sale of the subordinated notes will be approximately $39.1 million, and the subordinated notes are expected to qualify as Tier 2 capital for regulatory purposes. The Company intends to use the net proceeds from the offering for general corporate purposes, including but not limited to providing capital to support its acquisition of First Community Bancorp, Inc. ("First Community") and the redemption of the Company's outstanding $10 million of 5.75% senior notes due February 15, 2022.

"This capital gives us an opportunity to refinance our existing senior notes at a more attractive rate, and also helps support our acquisition of First Community Bancorp, Inc.," said Peter J. Johnson, President and Chief Executive Officer of the Company. "We intend to use the remaining capital available to build out our business plan and meet the growing demand from our clients."

In connection with the sale and issuance of the Notes, the Company entered into a Registration Rights Agreement (the "Registration Rights Agreement") with the purchasers of the Notes pursuant to which the Company has agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act of 1933, as amended, and have substantially the same terms as the Notes. Under certain circumstances, if the Company fails to meet its obligations under the Registration Rights Agreement, it would be required to pay additional interest to the holders of the Notes.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful. The above referenced securities offered and sold by the Company have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold absent registration or an exemption from registration.

Performance Trust Capital Partners, LLC served as placement agent for this offering. Holland & Knight LLP served as the Company's legal counsel in this offering, and Silver, Freedman, Taff & Tiernan LLP served as placement agent's counsel.