Freedom Financial Holdings, Inc. Completes $20 Million Subordinated Notes Offering

Rhea-AI Summary

Freedom Financial Holdings completed a $20 million private placement of 3.5% fixed-to-floating rate subordinated notes due 2031, aimed at enhancing liquidity and supporting growth. Rated BBB by Egan Jones, these unsecured notes will initially bear interest at a fixed annual rate, transitioning to a variable rate linked to the three-month SOFR. Proceeds will be utilized for general corporate purposes, reinforcing capital ratios. CEO Joseph J. Thomas expressed optimism about this funding enabling further expansion.

Positive

• Successfully completed a $20 million private placement.
• Notes rated BBB by Egan Jones Rating Company.
• Expected to enhance liquidity and support organic growth.

Negative

• None.

FAIRFAX, Va., Nov. 18, 2021 /PRNewswire/ -- Freedom Financial Holdings, Inc. ("Freedom Financial" or the "Company") (OTCQX: FDVA), the holding company for The Freedom Bank of Virginia (the "Bank") announced that it has completed a private placement of $20 million of 3.5% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors (the "Private Placement"). The Notes were rated BBB by Egan Jones Rating Company.  Freedom Financial intends to use the net proceeds from the Private Placement for general corporate purposes, including continued growth and maintenance of bank level regulatory capital ratios. 

The Notes have been structured to qualify as Tier 2 capital for regulatory capital purposes. The Notes are unsecured and have a ten-year term, maturing December 1, 2031, and will bear interest at a fixed annual rate of 3.5%, a spread of 194 basis points over the 10-year Treasury as of November 10, 2021 payable semi-annually in arrears, for the first five years of the term. Thereafter, the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Financing Rate ("Three-Month SOFR"), plus a spread of 244 basis points, payable quarterly in arrears, provided, however, that, in the event the Three-Month SOFR is less than zero, the Three-Month SOFR shall be deemed to be zero. The Company may redeem the Notes, in whole or in part, on or after December 1, 2026, and to redeem the Notes at any time in whole upon certain other specified events.

Joseph J. Thomas, President and CEO of the Bank and Freedom Financial commented, "We are delighted to have the support of an impressive investor group who oversubscribed our offering at very attractive pricing.  This important transaction provides us additional liquidity at the Company level, which in part will be down-streamed to the Bank to enable additional organic growth and continued expansion.  We look forward to the exciting opportunities ahead in our next chapter of growth."

Janney Montgomery Scott LLC served as the sole placement agent. Troutman Pepper Hamilton Sanders LLP served as legal counsel to Freedom Financial and Alston + Bird LLP served as legal counsel to the placement agent.

About Freedom Bank
Freedom Bank (OTCQX: FDVA) is a next-generation community bank, headquartered in Fairfax, Virginia, offering commercial banking, personal banking, and mortgage banking solutions using banker expertise and innovative technology to build lead relationships with clients. Focusing on businesses, real estate owners, and professionals, Freedom Bank concentrates on key industry verticals to deliver unique, sector-specific solutions to help clients meet their goals and realize their dreams. Freedom Bank had total assets of $ 846.6 million on September 30, 2021, and sales office locations in Fairfax, Vienna, Reston, Manassas, and Chantilly, VA. The Freedom Bank Mortgage Division is headquartered in Chantilly, VA and the Freedom Bank Small Business Lending Division is headquartered in Harrison, NY. For information about Freedom Bank, visit our website at www.freedom.bank.

Contact:
Joseph J. Thomas, President & Chief Executive Officer
Phone: 703-667-4161
Email: jthomas@freedom.bank

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SOURCE The Freedom Bank of Virginia

FAQ

What is the significance of the $20 million subordinated notes offering by FDVA?

The $20 million subordinated notes offering is significant as it enhances liquidity and supports continued growth for Freedom Financial.

What is the interest rate structure of FDVA's newly issued subordinated notes?

The subordinated notes bear an initial fixed interest rate of 3.5% for five years, then transition to a variable rate based on the three-month SOFR plus a spread.

How will Freedom Financial utilize the proceeds from the subordinated notes?

Freedom Financial plans to use the proceeds for general corporate purposes, including maintaining regulatory capital ratios.

What is the maturity date of the subordinated notes issued by FDVA?

The subordinated notes issued by Freedom Financial mature on December 1, 2031.