Montebello, N.Y.-based SterlingNational Bank, a unit of SterlingBancorp, closed an offering of $110 million aggregate principal amountof its 5.25% fixed-to-floating rate subordinatednotes due 2026. The size of the offering was increased from the announced $105 millionaggregate principal amount, according to a March 29 news release.
Sterling Bancorp disclosed in a Form 8-K that the notes wereissued at a price equal to 100% of the principal amount, resulting in net proceedsto the bank, after discounts and commissions and estimated offering expenses payableby the bank, of $108.1 million. Sterling National Bank intends to use the net proceedsfrom the offering for general corporate purposes, which may include working capital,potential acquisitions of commercial lending businesses and other strategic businessopportunities.
The notes are intended to qualify as Tier 2 capital for regulatorypurposes. They will bear interest at a fixed rate per annum of 5.25%, payable semiannuallyin arrears on April 1 and Oct. 1 of each year, starting Oct. 1, 2016, until April1, 2021. From and including April 1, 2021, the notes will bear interest at a floatingrate per annum that resets quarterly equal to three-month LIBOR plus 3.937%, payablequarterly in arrears on Jan. 1, April 1, July 1 and Oct. 1 of each year, beginningJuly 1, 2021, through maturity or earlier redemption.
The notes will mature April 1, 2026, unless earlier redeemed.They are redeemable by the bank, in whole or in part, on April 1, 2021, and on eachinterest payment date thereafter. The securities are also redeemable by the bank,in whole but not in part, at any time upon certain specified events.
Any redemption will be at a redemption price equal to 100% ofthe principal amount of notes redeemed, plus accrued and unpaid interest thereonto, but excluding, the redemption date. The notes are not subject to early repaymentat the option of the holders. Any redemption of the noteswill be subject to, and require, prior regulatory approval.
The notes were issued pursuant to an issuing and paying agencyagreement, dated as of March 29, by and between Sterling National Bank and U.S.Bank NA, as issuing and paying agent and note registrar. In connection with theissuance and sale of the securities, Sterling National Bank entered into a purchaseagreement, dated March 23, with U.S. Bancorp Investments Inc. and Piper Jaffray& Co., as the initial purchasers of the notes.