v3.26.1
Note 10 - Subordinated Debt Securities
12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Subordinated Borrowings Disclosure [Text Block]

NOTE 10. SUBORDINATED DEBT SECURITIES

 

On  April 6, 2022, the Company entered into a Subordinated Note Purchase Agreement with certain institutional accredited investors and qualified institutional buyers (the “Purchasers”) under which the Company issued $20.0 million in aggregate principal amount of its 2032 Notes to the Purchasers at a price equal to 100% of the aggregate principal amount of the 2032 Notes. The 2032 Notes were issued under an indenture, dated April 6, 2022 (the “Indenture”), by and among the Company and UMB Bank, National Association, as trustee.

 

The 2032 Notes have a stated maturity date of  April 15, 2032 and bear interest at a fixed rate of 5.125% per year from and including  April 6, 2022 to but excluding  April 15, 2027 or earlier redemption date. From  April 15, 2027 to but excluding the stated maturity date or earlier redemption date, the 2032 Notes will bear interest at a floating rate equal to the then current three-month term SOFR, plus 277 basis points. As provided in the 2032 Notes, the interest rate on the 2032 Notes during the applicable floating rate period  may be determined based on a rate other than three-month term SOFR. The 2032 Notes  may be redeemed, in whole or in part, on or after  April 15, 2027 or, in whole but not in part, under certain other limited circumstances set forth in the Indenture. Any redemption the Company made would be at a redemption price equal to 100% of the principal balance being redeemed, together with any accrued and unpaid interest to the date of redemption. 

 

Principal and interest on the 2032 Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events. The 2032 Notes are the unsecured, subordinated obligations of the Company and rank junior in right of payment to current and future senior indebtedness and to obligations to its general creditors. The 2032 Notes are intended to qualify as Tier 2 capital for regulatory purposes. 

 

During the year ended December 31, 2024, the Company repurchased $3.0 million in principal amount of the 2032 Notes.

 

On November 12, 2019, the Company issued and sold $25.0 million in aggregate principal amount of its 2029 Notes due December 30, 2029. Beginning on December 30, 2024, the Company could redeem the 2029 Notes, in whole or in part, at their principal amount plus any accrued and unpaid interest. The 2029 Notes bore an interest rate of 5.125% per annum until December 30, 2024, on which date the interest rate would reset quarterly to an annual interest rate equal to the then-current three-month LIBOR as calculated on each applicable date of determination, or an alternative rate determined in accordance with the terms of the 2029 Notes if the three-month LIBOR could not be determined, plus 349.0 basis points.

 

During the second quarter of 2024, the Company repurchased $5.0 million in principal amount of the 2029 Notes, and on December 30, 2024, the Company redeemed the remaining $20.0 million in principal amount in full accordance with their terms at a redemption price equal to 100% of the outstanding principal balance plus accrued and unpaid interest up to but excluding the December 30, 2024 redemption date.

 

The carrying value of subordinated debt was $16.7 million at December 31, 2025 and 2024. The carrying value of subordinated debt includes unamortized issuance costs of $0.3 million at December 31, 2025 and 2024, which are being amortized using a method that approximates the effective interest method over the lives of the respective securities.