Subordinated Notes

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Subordinated Notes

Subordinated NotesIn August 2021, the Company completed the private placement of $16.5 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and accredited investors. The Notes initially bear interest, payable semi-annually, at the rate of 3.25% per annum, until September 1, 2026. From and including September 1, 2026, the interest rate applicable to the outstanding principal amount due will reset quarterly to the then current three-month secured overnight financing rate (SOFR) plus 263 basis points. At its option, the Company may redeem the Notes, in whole or in part, beginning with the interest payment date of September 1, 2026 but not generally prior thereto, and on any scheduled interest payment date thereafter. The Notes qualify as Tier 2 capital instruments for the Company under bank holding company regulatory capital guidelines.

The Company used the proceeds primarily to provide additional Tier 1 capital to the Company's wholly-owned subsidiary, Union Bank, to support its growth and for other general corporate purposes.

The unamortized issuance costs of the Notes were $278 thousand and $295 thousand at June 30, 2023 and December 31, 2022, respectively. The Company recorded $9 thousand and $17 thousand of issuance costs in interest expense for the three and six months ended June 30, 2023 and 2022, respectively. The Notes are presented net of unamortized issuance costs in the consolidated balance sheets.