Sturgis Bancorp has completed a $25.5 million private placement of 7% fixed-to-floating rate subordinated notes due September 15, 2036 to qualified institutional buyers and accredited investors.
The notes were issued at 100% of their principal amount and are intended to qualify as Tier 2 regulatory capital.
Sturgis Bancorp plans to use the net proceeds for general corporate purposes, including repayment of approximately $17.9 million of existing indebtedness and a downstream capital contribution to Sturgis Bank & Trust Company.
The notes will pay a fixed annual interest rate of 7% through September 15, 2031. After that date, the rate will reset to an expected three-month Term SOFR benchmark plus 286 basis points, payable quarterly.
Beginning September 15, 2031, Sturgis may redeem the notes on scheduled interest payment dates at 100% of principal plus accrued and unpaid interest.
Brean Capital served as financial advisor and sole placement agent. Amundsen Davis represented Brean Capital, while Warner Norcross + Judd served as legal counsel to Sturgis Bancorp.
