v3.25.2
Note 10 - Subordinated Debentures
 6 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Debt Disclosure [Text Block]
 

(10)

Subordinated Debentures

 

As a result of its acquisition of Commonwealth Bancshares, Inc. on March 7, 2022, Bancorp became the 100% successor owner of the following unconsolidated trust subsidiaries: Commonwealth Statutory Trust III, Commonwealth Statutory Trust IV and Commonwealth Statutory Trust V. The sole assets of the trust subsidiaries represent the proceeds of offerings loaned in exchange for subordinated debentures with similar terms to the TPS. The TPS are treated as part of Tier I Capital. The subordinated notes and related interest expense are included in Bancorp’s consolidated financial statements. The subordinated notes are currently redeemable at Bancorp’s option on a quarterly basis. Bancorp chose not to redeem the subordinated notes on July 1, 2025 and carried the notes at the costs noted below at June 30, 2025:

 

(dollars in thousands)

  

Face Value

    

Carrying

Value

  

Origination

Date

  

Maturity

Date

  

Interest Rate
                           

Commonwealth Statutory Trust III

   $ 3,093     $ 3,093  

12/19/2003

  

1/7/2034

  

SOFR + 2.85%

Commonwealth Statutory Trust IV

     12,372       12,372  

12/15/2005

  

12/30/2035

  

SOFR + 1.35%

Commonwealth Statutory Trust V

     11,341       11,341  

6/28/2007

  

9/15/2037

  

SOFR + 1.40%

Total

   $ 26,806     $ 26,806            

 

As part of the purchase accounting adjustments associated with the CB acquisition, the carrying values of the subordinated notes were adjusted to fair value at acquisition date. The related discounts on the subordinated notes have been amortized and recognized as a component of interest expense in Bancorp’s consolidated financial statements. The discounts became fully amortized during the first quarter of 2024.