Atlantic Union Bankshares in Richmond, Virginia, is issuing $250 million in fixed-to-floating subordinated notes to extinguish debt and possibly to fund acquisitions.
The $19.9 billion-asset Atlantic Union plans to use $150 million of the new subordinated notes, which carry an initial interest rate of 2.875%, to redeem a block of higher-cost 5% fixed-to-floating subordinated notes it issued in 2016.
The bank plans to use the remaining $100 million for general corporate purposes, including possible acquisitions. And because of the lower rate, the company expects to save about $500,000 annually in interest payments.
“It’s a very good deal,” Bill Cimino, Atlantic Union’s senior vice president of investor relations, said Friday. “We’re very pleased with the market response. We were significantly oversubscribed. We could have done much more than we ended up doing.”
According to Performance Trust Capital Partners, which tracks bank capital raises, Atlantic Union’s planned note issuance ranks among the largest involving subordinated debt in 2021. It’s the largest capital raise of any kind for a bank since Oct. 28, when the $206 billion-asset Fifth Third Bancorp settled the issuance of its inaugural $500 million
On Nov. 29, just before the start of Atlantic Union’s public offering, Kroll Bond Rating Agency reaffirmed its rating on the company’s subordinated debt at BBB+. KBRA also upgraded its outlook for all of Atlantic Union’s long-term ratings from stable to positive.
The subordinated debt offering is scheduled to close Dec. 8.
