Item 1.01Entry into a Material Definitive Agreement
On September 27, 2019, Allegiance Bancshares, Inc. (the “Company”) completed its previously announced public offering of $60,000,000 aggregate principal amount of its 4.70% Fixed-to-Floating Rate Subordinated Notes due October 1, 2029 (the “Notes”). The Notes will initially be treated as Tier 2 capital or the equivalent for bank regulatory purposes. The offering of the Notes was consummated pursuant to the Company’s registration statement on Form S-3 (File No. 333-215610) filed with the Securities and Exchange Commission (the “SEC”) on January 18, 2017, as supplemented by the prospectus supplement, dated September 20, 2019 (the “Prospectus Supplement”), filed with the SEC on September 23, 2019.
The Notes were issued pursuant to the Subordinated Debt Indenture, dated as of September 20, 2019 (the “Base Subordinated Indenture”), between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of September 27, 2019 (the “Supplemental Indenture” and, together with the Base Subordinated Indenture, the “Indenture”), between the Company and the Trustee.
From, and including the date of issuance to, but excluding October 1, 2024, the Notes will bear interest at an initial fixed rate of 4.70% per annum, payable semi-annually in arrears on April 1 and October 1, commencing on April 1, 2020. Thereafter, from October 1, 2024 through the maturity date, October 1, 2029, or earlier redemption date, the Notes will bear interest at a floating rate equal to the then-current three-month LIBOR, plus 313 basis points (3.13%) for each quarterly interest period (subject to certain provisions set forth under “Description of the Notes—Interest Rates and Interest Payment Dates” included in the Prospectus Supplement), payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year.
The Notes are subordinated unsecured obligations of the Company and rank equally with all of the Company’s existing and future subordinated indebtedness. The Notes are subordinated in right of payment to all of the Company’s existing and future “Senior Indebtedness” (as defined in the Indenture), and effectively subordinated to all of the Company’s existing and future secured indebtedness. The Notes are not obligations of, and are not, and will not be, guaranteed by, any of the Company’s subsidiaries, including Allegiance Bank.
The Notes are not subject to repayment at the option of the holders, but may be redeemed by the Company beginning with the interest payment date of October 1, 2024, but not prior thereto, except upon the occurrence of certain events specified under the Indenture and described under “Description of the Notes—Optional Redemption and Redemption Upon Special Events” in the Prospectus Supplement. The Notes will not have the benefit of any sinking fund.
The foregoing descriptions of the Indenture and the Notes are each qualified in their entirety by reference to the full text of the Indenture and the Notes, respectively, copies of which are attached hereto as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, and are incorporated herein by reference. A copy of the opinion of Bracewell LLP, counsel to the Company, relating to the validity of the Notes is filed as Exhibit 5.1 hereto.