Bay Banks of Virginia Inc. completed a private placement of $25 million in fixed-to-floating rate subordinated notes due Oct. 15, 2029.
Proceeds from the sale of the notes will be used for general corporate purposes, including the potential repayment of the company's existing subordinated debt, which becomes callable in May 2020, and supporting capital levels at the company's unit, Virginia Commonwealth Bank.
The notes have been structured to qualify as Tier 2 capital under bank regulatory guidelines. These will initially bear interest at 5.625% per annum, beginning Oct. 7, 2019, through Oct. 14, 2024, payable semiannually in arrears. From Oct. 15, 2024, through Oct. 14, 2029, or up to an early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month secured overnight financing rate plus 433.5 basis points, payable quarterly in arrears.
Starting Oct. 15, 2024, through maturity, the company may redeem the notes at its option on any scheduled interest payment date.
Sandler O'Neill & Partners LP was the sole placement agent in the offering.
