Shore Bancshares, Inc. (NASDAQ-SHBI), the holding company for Shore United Bank announced the completion of its private placement of $25 million of its 5.375% Fixed to Floating Rate Subordinated Notes due 2030 to certain qualified institutional buyers and accredited investors.
The Notes will initially bear interest at a fixed annual rate of 5.375% for the first five years and will reset quarterly thereafter to the then current three-month SOFR rate plus 526.5 basis points. The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes for the Company.
The Company intends to use the net proceeds from the private placement for general corporate purposes, organic growth and to support the Bank's regulatory capital ratios.
In connection with the issuance and sale of the Notes, the Company entered into a registration rights agreement with each of the purchasers of the Notes pursuant to which the Company has agreed to take certain actions to provide for the exchange of the Notes for subordinated notes that are registered under the Securities Act of 1933, as amended (the "Securities Act"), with substantially the same terms as the Notes.
Lloyd "Scott" Beatty, Jr., President and CEO of the Company, commented, "We are very pleased with the outcome of our offering. Currently, we are cautiously optimistic that the credit issues across the industry will not be as dire as many have predicted. However, no one really knows how the impact of the pandemic will ultimately play out. Therefore, we determined that having additional "safety capital" was prudent. If credit issues do not develop, we will be in a position to use this capital offensively in a number of ways to improve shareholder value."
Piper Sandler & Co. served as the lead placement agent and Janney Montgomery Scott LLC served as the co-placement agent for the private placement. Holland & Knight LLP served as legal counsel to the Company and Kilpatrick Townsend & Stockton LLP served as legal counsel to the placement agents.
Shore Bancshares Information
Shore Bancshares is a financial holding company headquartered in Easton, Maryland and is the largest independent bank holding company located on Maryland's Eastern Shore. It is the parent company of Shore United Bank. Shore Bancshares engages in trust and wealth management services through Wye Financial Partners, a division of Shore United Bank.
Additional information is available at www.shorebancshares.com.
