First Bank closed a $35 million subordinated notes private placement to redeem existing notes and support growth.
Quiver AI Summary
First Bank announced the successful closing of a $35.0 million private placement of subordinated notes to enhance its capital base and redeem existing debt. The fixed-to-floating rate notes will initially carry a fixed interest rate of 7.125% for five years, after which they will switch to a floating rate tied to the three-month SOFR plus 343 basis points. The notes, which mature on June 30, 2035, can be redeemed without penalty after June 30, 2030, and qualify as Tier 2 capital. Bank President and CEO Patrick L. Ryan highlighted the benefits of the offering in terms of reducing interest costs and avoiding share dilution. Piper Sandler & Co. acted as the sole placement agent, and the bank has a strong presence in New Jersey and Pennsylvania, with total assets of $3.88 billion as of March 31, 2025.
Potential Positives
- First Bank successfully closed a $35.0 million private placement of subordinated notes, enhancing its capital base to support future growth.
- The funds will be used to redeem existing subordinated notes, reducing the overall cost of capital due to a lower interest rate of 7.125% for the first five years.
- The structured notes qualify as Tier 2 capital for regulatory purposes, strengthening the bank's capital position.
- The option to redeem the notes without penalty after June 30, 2030, provides financial flexibility to the Bank.
Potential Negatives
- The issuance of subordinated notes indicates reliance on debt financing, which may raise concerns about the company's overall financial health and ability to manage debt obligations.
- The fixed-to-floating interest rate structure may expose the company to future interest rate volatility, potentially increasing borrowing costs after the initial fixed period.
- The risks and uncertainties mentioned in the forward-looking statements could undermine shareholder confidence, as they indicate potential challenges to achieving anticipated financial performance.
FAQ
What is the amount of the subordinated notes First Bank has closed?
First Bank announced the closing of a $35.0 million private placement of subordinated notes.
What will the proceeds from the notes be used for?
The proceeds will be used to redeem existing subordinated notes and for general corporate purposes.
What is the interest rate structure of the new notes?
The notes carry a fixed interest rate of 7.125% for the first five years, then a floating rate thereafter.
When can First Bank redeem the new subordinated notes?
The notes can be redeemed by First Bank without penalty on or after June 30, 2030.
What is the significance of these notes for First Bank's capital?
The notes are structured to qualify as Tier 2 capital, enhancing the Bank’s capital base for growth.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
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Full Release
HAMILTON, N.J., June 18, 2025 (GLOBE NEWSWIRE) -- First Bank (the “Bank”) (NASDAQ: FRBA) today announced the closing of a $35.0 million private placement of fixed-to-floating rate subordinated notes. The Bank plans to use the proceeds to redeem its outstanding $30.0 million of subordinated notes and for general corporate purposes.
The notes have a maturity date of June 30, 2035, and carry a fixed rate of interest of 7.125% for the first five years. Thereafter, the notes will pay interest at a floating rate, reset quarterly, equal to the then current three-month Secured Overnight Financing Rate (“SOFR”) plus 343 basis points. The notes may be redeemed at the option of the Bank, without penalty, on or after June 30, 2030. The notes have been structured to qualify as Tier 2 capital for regulatory purposes.
President and Chief Executive Officer Patrick L. Ryan discussed the offering: "We are pleased to announce the successful completion of our subordinated debt offering. This new capital will allow us to retire our existing subordinated notes at a lower interest rate and enhance our capital base to support our continued growth without the dilutive impact of issuing additional shares of common stock. Furthermore, the tax-deductible nature of the instrument, combined with low interest rate, makes the overall cost of capital quite attractive."
Piper Sandler & Co. served as sole placement agent for the private offering. First Bank was advised by Luse Gorman, PC and Piper Sandler & Co. was advised by Silver, Freedman, Taff & Tiernan LLP.
About First Bank
First Bank is a New Jersey state-chartered bank with 27 full-service branches in Cinnaminson, Delanco, Denville, Ewing, Fairfield, Flemington, Hamilton, Lawrence, Monroe, Pennington, Randolph, Somerset, Trenton, Williamstown, Morristown and Summit, New Jersey, Doylestown, Trevose, Warminster, West Chester, Paoli, Malvern, Coventry, Devon, Lionville, Media, Pennsylvania, and Palm Beach, Florida. With $3.88 billion in assets as of March 31, 2025, First Bank offers a traditional range of deposit and loan products to individuals and businesses mainly throughout the New York City to Philadelphia corridor. First Bank's common stock is listed on the Nasdaq Global Market exchange under the symbol “FRBA”.
This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond First Bank's control and could impede its ability to achieve these goals. These factors include those listed under Item 1A-Risk Factors in our Annual Report on Form 10-K for the period ended December 31, 2024 and our Quarterly Report on Form 10-Q for the period ended March 31 2025, many of which are out of our control. If one or more events related to these or other risks or uncertainties materialize, or if First Bank’s underlying assumptions prove to be incorrect, actual results may differ materially from what First Bank anticipates. Accordingly, you should not place undue reliance on any such forward-looking statements.
Contact
Andrew Hibshman, Chief Financial Officer
(609) 643-0058, [email protected]
