Peoples Bancorp Announces Full Redemption Of Trust Preferred Securities
Peoples Bancorp (NASDAQ: PEBO) today announced the Board of Directors approved actions that will result in the full redemption of the $23.0 million outstanding Series B 8.62% Capital Securities issued by PEBO Capital Trust I, an affiliated Delaware trust, (the "Trust Preferred Securities") currently held by institutional investors, $7.0 million of Trust Preferred Securities and all of the common securities issued by PEBO Capital Trust I and currently held by Peoples.
As part of this transaction, Peoples has submitted a notice of prepayment to the property trustee for the entire outstanding Series A 8.62% Junior Subordinated Deferrable Interest Debenture due May 1, 2029, having an aggregate liquidation value of $928,000, and the entire outstanding Series B 8.62% Junior Subordinated Deferrable Interest Debenture due May 1, 2029, having an aggregate liquidation value of $30,000,000 (collectively the "Junior Subordinated Debentures"), currently held by PEBO Capital Trust I.
The prepayment of the Junior Subordinated Debentures and related redemption of the Trust Preferred Securities are scheduled to occur on December 19, 2012, at an amount equal to 103.017% of their liquidation amounts, plus accumulated and unpaid distributions to, but not including, the date of redemption. As a result, Peoples will recognize a pre-tax loss of approximately $1.0 million (or $0.06 per diluted common share after-tax) during the fourth quarter of 2012. This amount represents the early repayment premium plus the remaining unamortized issuance costs.
Peoples intends to fund the redemption using proceeds to be received immediately prior to the redemption from a term loan with an unaffiliated financial institution at a lower rate of interest than the Junior Subordinated Debentures. As a result, this transaction should enhance Peoples' 2013 net interest income by approximately $1.1 million, or 5 basis points of net interest margin.
The Junior Subordinated Debentures currently qualify as Tier 1 capital under the risk-based capital standards for bank holding companies. After completion of this transaction, Peoples' Tier 1 and total risk-based capital ratios are expected to be approximately 13.6% and 14.9%, compared to 15.73% and 17.05%, respectively, at September 30, 2012, and the current well capitalized minimums of 6% and 10%, respectively.
The Trust Preferred Securities are held only in book-entry form through The Depository Trust Corporation ("DTC"). DTC will redeem the Trust Preferred Securities in accordance with its procedures and notify the holders. Holders of the Trust Preferred Securities need not take any action to receive payment of the redemption price.
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