QUAKERTOWN, PA — QNB Corp. (OTC Bulletin Board: QNBC), the parent company of QNB Bank, on Tuesday, successfully completed a private placement of $40 million in fixed-to-floating rate subordinated notes. This strategic move aims to bolster the company’s capital position and support future growth initiatives.
The subordinated notes are structured to qualify as Tier 2 capital under regulatory guidelines. They will initially bear an interest rate of 8.875% per annum until September 1, 2029, with payments made semi-annually. After this period, the interest will adjust quarterly based on the three-month Secured Overnight Financing Rate (SOFR) plus a spread, with payments made quarterly. The notes are set to mature on September 1, 2034. However, from the fifth anniversary of the issue date, QNB has the option to redeem the notes in part or in full on scheduled interest payment dates, or in certain specified events.
The offering, which saw a nearly two-fold oversubscription, highlights strong investor confidence in QNB Corp.’s financial health and growth prospects. David W. Freeman, President and CEO of QNB, expressed enthusiasm about the successful placement. “We are excited to announce the successful completion of our subordinated debt offering with such demand and attractive terms. We entered this offering from a position of strength with significant growth and market opportunity. We will leverage the capital to support our future growth, further enabling QNB to take advantage of market opportunities while remaining the heartbeat of our communities.”
Jeffrey Lehocky, Executive Vice President and CFO of QNB, emphasized the strategic benefits of the capital raise. “Through issuing these notes, we have cost-effectively increased our capital levels without diluting current shareholders. As our first institutionally led capital raise, we are pleased with the participation and execution, which exemplifies the value of QNB’s franchise.”
Performance Trust Capital Partners acted as the sole placement agent for the offering, with legal counsel provided by Stevens & Lee for QNB and Hogan Lovells for Performance Trust Capital Partners.
The proceeds from this transaction will be directed towards general corporate purposes and potential strategic opportunities, positioning QNB Corp. for continued expansion and success in its market endeavors.
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