SUBORDINATED DEBENTURES

3 Months Ended

Mar. 31, 2020

Subordinated Debt [Abstract]

Subordinated Debt

Note 8 – SUBORDINATED DEBT

On November 5, 2019, the Company completed an offering of $175.0 million aggregate principal amount Fixed to Floating Rate Subordinated Notes due in 2029. The notes bear a fixed interest rate of 4.25% per year through November 14, 2024. Beginning November 15, 2024, the interest rate will become a floating rate equal to three month LIBOR, or an alternative benchmark rate as determined pursuant to the terms of the indenture for the notes in the event LIBOR has been discontinued by November 15, 2024, plus 262 basis points through the remaining maturity or early redemption date of the notes. The interest will be paid in arrears semi-annually during the fixed rate period and quarterly during the floating rate period. The Company incurred $2.9 million of debt issuance costs which are being amortized through the contractual life of the debt. The entire amount of subordinated debt is considered Tier 2 capital under current regulatory guidelines.

In conjunction with the acquisition of WashingtonFirst Bankshares, Inc., the Company assumed $25.0 million in non-callable subordinated debt and $10.3 million in callable junior subordinated debt securities. The associated purchase premiums at acquisition were $2.2 million and $0.1 million, respectively. The premiums are amortized over the contractual life of each obligation.

During the first quarter of 2020, the Company redeemed $10.3 million of the outstanding principal balance of callable junior subordinated debt securities.

The non-callable subordinated debt has a maturity of ten years, is due in full on October 15, 2025, is non-callable until October 15, 2020 and currently bears a fixed interest rate of 6.00% per annum, payable quarterly, subject to a reset after 5 years (on October 5, 2020) at 3 month LIBOR plus 467 basis points. The entire amount of subordinated debt is considered Tier 2 capital under current regulatory guidelines.

The following table provides information on subordinated debentures as of the date indicated:

(In thousands)		March 31, 2020		December 31, 2019
Subordinated debentures		$	200,000	$	200,000
	Add: Purchase accounting premium		1,846		1,894
	Less: Debt Issuance Costs		(2,800)		(2,885)
Trust preferred capital notes			-		10,310
	Add: Purchase accounting premium		-		87
Total subordinated debentures		$	199,046	$	209,406