Ballston Spa Bancorp, Inc. Completes $26 Million Subordinated Debt Raise

Key Terms

subordinated notes financial

Subordinated notes are loans companies issue that rank below other debts for repayment, meaning holders get paid only after higher-priority creditors if the issuer runs into trouble. Because they act like being farther back in line at a buffet, they usually offer higher interest to compensate for greater risk, so investors watch them for potential higher returns but also increased chance of loss and sensitivity to the issuer’s financial health.

tier 2 capital regulatory

Tier 2 capital is the secondary cushion a bank holds to absorb losses after its core capital is used, made up of items like long-term subordinated debt and certain reserves. Think of it as a backup battery that kicks in only after the main battery fails; it matters to investors because its size and quality affect a bank’s regulatory strength, creditworthiness, and the safety of dividends and bond payments under stress.

sofr financial

The Secured Overnight Financing Rate (SOFR) is a market benchmark that measures the cost of borrowing cash overnight using U.S. Treasury securities as collateral. Investors watch SOFR because it acts like a speedometer for short-term interest costs—affecting loan rates, bond yields and the pricing of interest-rate contracts—so movements change borrowing expenses, cash returns and the value of interest-sensitive investments.

basis points financial

Basis points are a way to measure small changes in interest rates or percentages, where one basis point equals 0.01%. For example, if a loan's interest rate increases by 50 basis points, it's gone up by 0.50%. They help people understand tiny differences in rates that can add up over time, making financial comparisons clearer.

accredited investors regulatory

Accredited investors are individuals or entities considered to have enough financial knowledge and resources to understand and handle more complex and risky investments. They are often allowed to participate in private investment opportunities that are not available to the general public, similar to how experienced players might access exclusive clubs or events. This status helps ensure that investors can manage potential risks and rewards appropriately.

placement agents financial

Placement agents are professional intermediaries who help companies, investment funds or governments find and secure investors when selling stocks, bonds or private securities, acting like a matchmaker that introduces sellers to suitable buyers. For investors, the choice of placement agent matters because their network, reputation and negotiating skill affect who gets access, the price and the speed of a deal, and they can introduce conflicts or additional fees that influence returns.

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BALLSTON SPA, N.Y.--(BUSINESS WIRE)-- Ballston Spa Bancorp, Inc. (OTCQX: BSPA), holding company for Ballston Spa National Bank (collectively “BSNB”), today announced the completion of a $26 million subordinated notes offering to certain qualified institutional buyers and accredited investors. The private placement of notes will support the previously announced proposed merger with NBC Bancorp, Inc. (OTCID: NCXS), holding company for The National Bank of Coxsackie (collectively “NBC”). The majority of the net proceeds of the offering being contributed to BSNB to support the bank merger and to provide requisite capital for general corporate purposes in support of the ongoing operations of the combined bank.

The new notes have a maturity date of April 1, 2036, and carry a fixed interest rate of 7.375% through April 1, 2031, and a floating rate of 90-day average SOFR plus 378 basis points thereafter. The notes may be redeemed, in whole or in part, on or after April 1, 2031, or at any time in whole upon certain other specified regulatory events. The subordinated notes have been structured to qualify as Tier 2 capital for regulatory purposes.

The notes are not 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.

Griffin Financial Group LLC and Brean Capital LLC served as placement agents for the offering while Luse Gorman, PC served as legal counsel to BSNB and Stevens & Lee served as legal counsel to the placement agents.

Forward Looking Statements

This document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about BSNB or NBC’s beliefs, plans, strategies, predictions, forecasts, objectives, intentions, assumptions or expectations are not historical facts and may be forward-looking. Forward-looking statements are often, but not always, identified by such words as "believe," "expect," "anticipate," "can," "could," "may," "predict," "potential," "intend," "outlook," "estimate," "forecast," "project," "should," "will," and other similar words and expressions, and are subject to numerous assumptions, risks, and uncertainties, which may change over time. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those indicated in such forward-looking statements as a result of a variety of factors, many of which are beyond the control of BSNB and NBC. Such statements are based upon the current beliefs and expectations of the management of BSNB and NBC and are subject to significant risks and uncertainties outside of the control of the parties. Caution should be exercised against placing undue reliance on forward-looking statements. The factors that could cause actual results to differ materially include the following: the reaction to the transaction of the companies' customers, employees and counterparties; customer disintermediation; inflation; expected synergies, cost savings and other financial benefits of the proposed transaction might not be realized within the expected timeframes or might be less than projected; credit and interest rate risks associated with BSNB’s and NBC's respective businesses, customers, borrowings, repayment, investment, and deposit practices; general economic conditions, either nationally or in the market areas in which BSNB and NBC operate or anticipate doing business, are less favorable than expected; new regulatory or legal requirements or obligations; and other risks.

Any forward-looking statement speaks only as of the date on which it is made, and BSNB and NBC undertake no obligation to update any forward-looking statement, whether to reflect events or circumstances after the date on which the statement is made, to reflect new information or the occurrence of unanticipated events, or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20260325919695/en/

Media contact or for more information:

Ballston Spa National Bank

Media:
Pamela J. Montpelier, Senior Vice President,
Growth and Experience Officer
(518) 363-8634
Pamela.Montpelier@bsnb.com

Investor Relations:
James Dodd, Executive Vice President, Chief Financial Officer
(518) 363-8651
James.Dodd@bsnb.com

Source: Ballston Spa Bancorp, Inc.