Griffin Serves as Placement Agent to AmeriServ Financial in Connection with its $27 Million Private Placement of Subordinated Notes
AmeriServ Financial Inc. is the parent of AmeriServ Financial Bank and AmeriServ Trust and Financial Services Company in Johnstown, PA. The Company’s subsidiaries provide full-service banking and wealth management services through seventeen community offices in southwestern Pennsylvania and Hagerstown, Maryland.
On August 26, 2021, AmeriServ completed a private placement of $27 million aggregate principal amount of fixed- to floating-rate subordinated notes due Sept. 1, 2031.
The notes are unsecured and will bear interest at a fixed annual rate of 3.75%, payable semiannually in arrears until Sept. 1, 2026. From and including Sept. 1, 2026, the interest rate will reset quarterly to the then-current three-month secured overnight financing rate plus 3.11%. AmeriServ Financial may redeem the notes, in whole or in part, on or after Sept. 1, 2026, or at any time in whole upon certain events.
The Company intends to use approximately $20 million of the net proceeds to retire its existing subordinated debt and trust preferred securities that have a weighted average cost of 7.73%. This action alone will reduce the Company’s interest expense by approximately $500,000 annually. The remainder of the proceeds will be utilized to support the growth of its subsidiaries and other general corporate purposes.
Jeffrey A. Stopko, President and Chief Executive Officer, stated: “We are very pleased to announce the successful completion of our subordinated debt offering. The transaction is strategically important to AmeriServ Financial because the ongoing reduction in our debt costs along with the flexibility the additional capital provides to support further loan growth will have a meaningful positive impact on our financial performance. Overall, we expect to see a $1.4 million annual reduction in interest expense beginning in the fourth quarter of 2021 when the interest expense savings from this transaction is combined with the use of core deposits from our recently completed Somerset County branch acquisition to replace higher cost institutional deposits.” Griffin Financial served as financial advisor and placement agent for the offering, and Stevens & Lee was legal counsel to AmeriServ Financial.