Franklin Financial Network in Franklin, Tenn., plans a debt issuance to pay for its recently completed exit from the Small Business Lending Fund and to fund other activities.
The $2.2 billion-asset company said Wednesday that it will issue $40 million of 6.875% subordinated notes due in 2026. The notes will switch to a floating rate in 2021.
Franklin, the holding company for Franklin Synergy Bank, plans to use some of the proceeds from the debt sale to pay down a $10 million line of credit obtained to redeem its SBLF preferred stock. The redemption closed on March 25. Franklin originally issued the SBLF preferred shares to the Treasury Department in September 2011.
Franklin has earmarked the remaining proceeds for general corporate purposes.
Banks that participated in the SBLF program and still have outstanding shares have an incentive to redeem those shares, as the dividend rate is set to rise to 9% from 1%.
Franklin obtained the $10 million credit line from the $823 million-asset First National Bankers Bank in Baton Rouge, La.
Bank of America Merrill Lynch and Raymond James are financial advisers to Franklin on the debt sale. Baker, Donelson, Bearman, Caldwell & Berkowitz is Franklin's legal counsel.