NOTE 13 – SUBORDINATED DEBT

On May 27, 2021, the Company entered into Subordinated Note Purchase Agreements with qualified institutional buyers and accredited investors pursuant to which the Company issued and sold $20.0 million in aggregate principal amount of its 3.65% Fixed to Floating Rate Subordinated Notes due in 2031 (the “Notes”). The Notes were sold by the Company in a private placement exempt from the registration requirements under the Securities Act of 1933, as amended.

The Notes mature on June 1, 2031, and held a fixed interest rate of 3.65% through May 31, 2026. On June 1, 2026, the Notes moved into the floating rate period where the interest rate will reset quarterly to an interest rate per annum, equal to the then-current-three-month SOFR provided by the Federal Reserve Bank of New York plus 296 basis points until the maturity date or earlier redemption of the Notes. At June 30, 2026, the interest rate on the Notes was 6.60%. The Company may redeem the Notes after June 1, 2026, in whole at any time, or in part from time to time, at a redemption price equal to 100 percent of the outstanding principal amount to be redeemed, plus accrued but unpaid interest thereon to but excluding the redemption date. Any redemption of the Notes will be subject to prior regulatory approval. The Company incurred debt issuance costs for placement fees, legal and other out-of-pocket expenses of approximately $0.5 million, which are being amortized over the life of the Notes.