Knoxville, Tennessee, July 15, 2020 – Mountain Commerce Bancorp, Inc. (the “Company”) (OTCQX: MCBI), the holding company for Mountain Commerce Bank (the “Bank”), today announced the completion of an offering of $10 million in aggregate principal amount of fixed-to-floating rate subordinated notes due 2030 (the “Notes”) to certain institutional accredited investors. The Company intends to use the net proceeds of the offering for general corporate purposes, which may include, but not be limited to, funding corporate growth, repaying outstanding indebtedness and supporting the capital of the Bank.
The Notes will initially bear interest at a rate of 6.00% per annum from and including July 15, 2020 to, but excluding, July 15, 2025, with interest during this period payable semi-annually in arrears. From and including July 15, 2025 to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then current three-month term SOFR (provided, however, that in the event three-month term SOFR is less than zero, three-month term SOFR shall be deemed to be zero), plus 593 basis points, with interest during this period payable quarterly in arrears. The Notes are redeemable by the Company, in whole or in part, on or after July 15, 2025, and at any time, in whole but not in part, upon the occurrence of certain events. The redemption price will be equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to but excluding the redemption date. Any redemption of the Notes will be subject to prior regulatory approval, if then required. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.
“We are pleased to have completed this offering” said Bill Edwards, President and CEO. “While we are currently well capitalized, we believe this transaction provides an additional source of strength and capital should our borrowers be more negatively impacted than we currently anticipate. Further, should our current expectations be correct, we believe this transaction will give us the flexibility in responding to the economic downturn, including the ability to look for opportunities to grow what we do well: responsive, relationship banking.”
Raymond James & Associates, Inc. served as exclusive placement agent for the offering. Bass, Berry & Sims PLC served as legal counsel to the Company, and Fenimore, Kay, Harrison & Ford, LLP served as legal counsel to the placement agent.
The Notes will initially bear interest at a rate of 6.00% per annum from and including July 15, 2020 to, but excluding, July 15, 2025, with interest during this period payable semi-annually in arrears. From and including July 15, 2025 to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly to an annual floating rate equal to the then current three-month term SOFR (provided, however, that in the event three-month term SOFR is less than zero, three-month term SOFR shall be deemed to be zero), plus 593 basis points, with interest during this period payable quarterly in arrears. The Notes are redeemable by the Company, in whole or in part, on or after July 15, 2025, and at any time, in whole but not in part, upon the occurrence of certain events. The redemption price will be equal to 100% of the outstanding principal amount of the Notes to be redeemed, plus any accrued and unpaid interest to but excluding the redemption date. Any redemption of the Notes will be subject to prior regulatory approval, if then required. The Notes have been structured to qualify initially as Tier 2 capital for the Company for regulatory capital purposes.
“We are pleased to have completed this offering” said Bill Edwards, President and CEO. “While we are currently well capitalized, we believe this transaction provides an additional source of strength and capital should our borrowers be more negatively impacted than we currently anticipate. Further, should our current expectations be correct, we believe this transaction will give us the flexibility in responding to the economic downturn, including the ability to look for opportunities to grow what we do well: responsive, relationship banking.”
Raymond James & Associates, Inc. served as exclusive placement agent for the offering. Bass, Berry & Sims PLC served as legal counsel to the Company, and Fenimore, Kay, Harrison & Ford, LLP served as legal counsel to the placement agent.
The Notes have not been registered under the Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This press release is for informational purposes only and shall not constitute an offer to sell, or the solicitation of an offer to buy, any security, nor shall there by any sale in any jurisdiction in which such an offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. The indebtedness evidenced by the Notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.
Forward-Looking Statements
This press release may contain forward-looking statements. The words “expect,” “intend,” “should,” “may,” “could,” “believe,” “suspect,” “anticipate,” “seek,” “plan,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties that include, without limitation, (i) further deterioration in the financial condition of our borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and on our and our customers’ business, results of operations, asset quality and financial condition; (iii) deterioration in the real estate market conditions in our market areas, (iv) the impact of increased competition with other financial institutions, including pricing pressures, and the resulting impact our results, including as a result of compression to our net interest margin, (v) further deterioration of the economy in our market areas, (vi) fluctuations or differences in interest rates on loans or deposits from those that we are modeling or anticipating, including as a result of our inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve, (vii) the ability to grow and retain low-cost core deposits, (viii) significant downturns in the business of one or more large customers, (ix) our inability to maintain the historical growth rate of our loan portfolio, (x) risks of expansion into new geographic or product markets, (xi) the possibility of increased compliance and operational costs as a result of increased regulatory oversight, (xii) our inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels, (xiii) changes in state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, (xiv) changes in capital levels and loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments, (xv) inadequate allowance for loan losses, (xvi) results of regulatory examinations, (xvii) the vulnerability of our network and online banking portals, and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches, (xviii) the possibility of additional increases to compliance costs as a result of increased regulatory oversight, (xix) loss of key personnel, and (xx) adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future obligatory litigation, examinations or other legal and/or regulatory actions. These risks and uncertainties may cause our actual results or performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Our future operating results depend on a number of factors which were derived utilizing numerous assumptions that could cause actual results to differ materially from those projected in forward-looking statements.
About Mountain Commerce Bancorp, Inc. and Mountain Commerce Bank
Mountain Commerce Bancorp, Inc. is the holding company of Mountain Commerce Bank. The Company’s shares of common stock trade on the OTCQX under the symbol “MCBI”.
Mountain Commerce Bank is state-chartered financial institution that traces its history over a century and is headquartered in Knoxville, Tennessee serving East Tennessee through 5 branches located in Erwin, Johnson City, Knoxville and Unicoi. The Bank focuses on relationship banking of small and medium-sized businesses and high net worth individuals who value the personal service and attention that only a community bank can offer. For further information, please visit us at www.mcb.com
Mountain Commerce Bancorp, Inc. is the holding company of Mountain Commerce Bank. The Company’s shares of common stock trade on the OTCQX under the symbol “MCBI”.
Mountain Commerce Bank is state-chartered financial institution that traces its history over a century and is headquartered in Knoxville, Tennessee serving East Tennessee through 5 branches located in Erwin, Johnson City, Knoxville and Unicoi. The Bank focuses on relationship banking of small and medium-sized businesses and high net worth individuals who value the personal service and attention that only a community bank can offer. For further information, please visit us at www.mcb.com
Forward-Looking Statements
This press release may contain forward-looking statements. The words “expect,” “intend,” “should,” “may,” “could,” “believe,” “suspect,” “anticipate,” “seek,” “plan,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical fact may also be considered forward-looking. Such forward-looking statements involve known and unknown risks and uncertainties that include, without limitation, (i) further deterioration in the financial condition of our borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and on our and our customers’ business, results of operations, asset quality and financial condition; (iii) deterioration in the real estate market conditions in our market areas, (iv) the impact of increased competition with other financial institutions, including pricing pressures, and the resulting impact our results, including as a result of compression to our net interest margin, (v) further deterioration of the economy in our market areas, (vi) fluctuations or differences in interest rates on loans or deposits from those that we are modeling or anticipating, including as a result of our inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve, (vii) the ability to grow and retain low-cost core deposits, (viii) significant downturns in the business of one or more large customers, (ix) our inability to maintain the historical growth rate of our loan portfolio, (x) risks of expansion into new geographic or product markets, (xi) the possibility of increased compliance and operational costs as a result of increased regulatory oversight, (xii) our inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels, (xiii) changes in state or Federal regulations, policies, or legislation applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, (xiv) changes in capital levels and loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments, (xv) inadequate allowance for loan losses, (xvi) results of regulatory examinations, (xvii) the vulnerability of our network and online banking portals, and the systems of parties with whom we contract, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches, (xviii) the possibility of additional increases to compliance costs as a result of increased regulatory oversight, (xix) loss of key personnel, and (xx) adverse results (including costs, fines, reputational harm and/or other negative effects) from current or future obligatory litigation, examinations or other legal and/or regulatory actions. These risks and uncertainties may cause our actual results or performance to be materially different from any future results or performance expressed or implied by such forward-looking statements. Our future operating results depend on a number of factors which were derived utilizing numerous assumptions that could cause actual results to differ materially from those projected in forward-looking statements.
