CBAN 8-K
Colony Bankcorp Inc (CBAN)
8-K
2022-05-23
For: 2022-05-23
View Original
Added on
July 07, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 23, 2022
(Exact Name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||
(Address of Principal Executive Offices) (Zip Code)
(229 ) 426-6000
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | ||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | ||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | ||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | ||||||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each Class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On May 20, 2022, Colony Bankcorp, Inc. (the “Company”) entered into a Subordinated Note Purchase Agreement (the “Purchase Agreement”) with certain “qualified institutional buyers,” as defined in Rule 144A promulgated by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) (collectively, the “Purchasers”). Under the terms of the Purchase Agreement with the Purchasers, the Company issued and sold $40.0 million in aggregate principal amount of its 5.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Notes”). The Notes were issued by the Company to the Purchasers at a price equal to 100% of their face amount.
The Notes were offered and sold by the Company in a private placement transaction in reliance on exemptions from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D promulgated by the SEC thereunder. The Company intends to use the net proceeds it received from the sale of the Notes for general corporate purposes. The Purchase Agreement contains certain customary representations, warranties and covenants made by the Company, on the one hand, and the Purchasers, severally and not jointly, on the other hand.
The Notes mature on May 20, 2032 and bear interest at a fixed rate of 5.25% per year, from May 20, 2022 to, but excluding, May 20, 2027, payable semi-annually in arrears on June 30 and December 30 of each year, commencing on June 30, 2022. From and including May 20, 2027 to, but excluding, the maturity date or early redemption date, the interest rate will reset quarterly at a variable rate equal to the then current three-month Secured Overnight Financing Rate (“SOFR”), as published by the Federal Reserve Bank of New York, plus 265 basis points, payable quarterly in arrears on March 30, June 30, September 30 and December 30 of each year . As provided in the Notes, the interest rate on the Notes during the applicable floating rate period may be determined based on a rate other than three-month term SOFR.
Prior to May 20, 2027, the Company may redeem the Notes, in whole but not in part, only under certain limited circumstances set forth in the Notes. On or after May 20, 2027, the Company may redeem the Notes, in whole or in part, at its option, on any interest payment date. Any redemption by the Company would be at a redemption price equal to 100% of the principal amount of the Notes being redeemed, together with any accrued and unpaid interest on the Notes being redeemed to but excluding the date of redemption. Any redemption of the Notes will be subject to the receipt of any and all required federal and state regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System to the extent then required under applicable laws or regulations. The Notes are not subject to redemption at the option of the holder.
Principal and interest on the Notes are subject to acceleration only in limited circumstances in the case of certain bankruptcy and insolvency-related events with respect to the Company. The Notes are unsecured, subordinated obligations of the Company, are not obligations of, and are not guaranteed by, any subsidiary of the Company, and rank junior in right of payment to the Company’s current and future senior indebtedness. The Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The Notes are intended to qualify as Tier 2 capital of the Company for regulatory capital purposes.
The forms of the Purchase Agreement and the Note are attached as Exhibits 10.1 and 4.1, respectively, to this Current Report on Form 8-K (this “Form 8-K”) and are incorporated herein by reference. The foregoing descriptions of the Purchase Agreement and the Notes are summaries and are qualified in their entirety by reference to the full text of such documents.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth under Item 1.01 and the full text of the form of Note, which is attached hereto as Exhibits 4.1, is incorporated by reference into this Item 2.03.
ITEM 7.01. REGULATION FD DISCLOSURE.
On May 23, 2022, the Company issued a press release announcing the completion of the offering of the Notes, a copy of which is furnished herewith as Exhibit 99.1 to this Form 8-K.
In connection with the offering of the Notes, the Company delivered an investor presentation to potential investors on a confidential basis, a copy of which is furnished herewith as Exhibit 99.2 to this Form 8-K.
In accordance with General Instruction B.2 of Form 8-K, the information in Item 7.01 of this Form 8-K, including Exhibits 99.1 and 99.2 furnished herewith, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. The information in Item 7.01 of this Form 8-K, including Exhibits 99.1 and 99.2 furnished herewith, shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in such filing or document.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
(d)Exhibits.
| Exhibit Number | Description | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COLONY BANKCORP, INC. | ||||||||
| Date: May 23, 2022 | By: | /s/ Andrew Borrmann | ||||||
Andrew Borrman | ||||||||
Executive Vice President and Chief Financial Officer | ||||||||
Exhibit 4.1
FORM OF SUBORDINATED NOTE
COLONY BANKCORP, INC.
5.25% FIXED-TO-FLOATING RATE SUBORDINATED NOTE DUE 2032
THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY OR FUND.
THE INDEBTEDNESS EVIDENCED BY THIS SUBORDINATED NOTE IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO SENIOR INDEBTEDNESS (AS DEFINED IN SECTION 3 OF THIS SUBORDINATED NOTE) OF COLONY BANKCORP, INC. (THE “COMPANY”), INCLUDING OBLIGATIONS OF THE COMPANY TO ITS GENERAL AND SECURED CREDITORS, AND IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY THE COMPANY OR ANY OF ITS SUBSIDIARIES.
THIS SUBORDINATED NOTE IS A GLOBAL SUBORDINATED NOTE WITHIN THE MEANING OF SECTION 5 OF THIS SUBORDINATED NOTE AND IS REGISTERED IN THE NAME OF CEDE & CO AS NOMINEE OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SUBORDINATED NOTE IS EXCHANGEABLE FOR SUBORDINATED NOTES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN SECTION 5 OF THIS SUBORDINATED NOTE, AND NO TRANSFER OF THIS SUBORDINATED NOTE (OTHER THAN A TRANSFER OF THIS SUBORDINATED NOTE AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES SPECIFIED IN THIS SUBORDINATED NOTE.
UNLESS THIS SUBORDINATED NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SUBORDINATED NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO, OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS SUBORDINATED NOTE WILL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN SECTION 5 OF THIS SUBORDINATED NOTE.
IN THE EVENT OF LIQUIDATION ALL HOLDERS OF SENIOR INDEBTEDNESS OF THE COMPANY SHALL BE ENTITLED TO BE PAID IN FULL WITH SUCH INTEREST AS MAY BE PROVIDED BY LAW BEFORE ANY PAYMENT SHALL BE MADE ON ACCOUNT OF PRINCIPAL OF OR INTEREST ON THIS SUBORDINATED NOTE. AFTER PAYMENT IN FULL OF ALL SUMS OWING TO SUCH HOLDERS OF SENIOR INDEBTEDNESS, THE HOLDER OF THIS SUBORDINATED NOTE, TOGETHER WITH
THE HOLDERS OF ANY OBLIGATIONS OF THE COMPANY RANKING ON A PARITY WITH THE SUBORDINATED NOTES, SHALL BE ENTITLED TO BE PAID FROM THE REMAINING ASSETS OF THE COMPANY THE UNPAID PRINCIPAL AMOUNT OF THIS SUBORDINATED NOTE PLUS ACCRUED AND UNPAID INTEREST THEREON BEFORE ANY PAYMENT OR OTHER DISTRIBUTION, WHETHER IN CASH, PROPERTY OR OTHERWISE, SHALL BE MADE (I) WITH RESPECT TO ANY OBLIGATION THAT BY ITS TERMS EXPRESSLY IS JUNIOR IN THE RIGHT OF PAYMENT TO THE SUBORDINATED NOTES, (II) WITH RESPECT TO THE EXISTING JUNIOR SUBORDINATED DEBENTURES OF THE COMPANY (UNDERLYING THE OUTSTANDING TRUST PREFERRED SECURITIES ISSUED BY SUBSIDIARY TRUSTS OF THE COMPANY) AS OF THE DATE OF THE ISSUANCE OF THIS SUBORDINATED NOTE, TO WHICH THIS SUBORDINATED NOTE SHALL BE SENIOR, (III) WITH RESPECT TO ANY INDEBTEDNESS BETWEEN THE COMPANY AND ANY OF ITS SUBSIDIARIES OR AFFILIATES OR (IV) ON ACCOUNT OF ANY SHARES OF CAPITAL STOCK OF THE COMPANY.
THIS SUBORDINATED NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SUBORDINATED NOTE IN A DENOMINATION OF LESS THAN $100,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS SUBORDINATED NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PAYMENTS ON THIS SUBORDINATED NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS SUBORDINATED NOTE.
THIS SUBORDINATED NOTE MAY BE SOLD ONLY IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS, OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SUBORDINATED NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS SUBORDINATED NOTE HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, OR BY THE SECURITIES REGULATORY AUTHORITY OF ANY STATE, OR THE FDIC, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER OF THIS SUBORDINATED NOTE WILL DELIVER TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE COMPANY TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
CERTAIN ERISA CONSIDERATIONS:
EACH PURCHASER AND HOLDER OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
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1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH, A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SUBORDINATED NOTE, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER: (I) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH PLAN OR OTHER PLAN TO FINANCE SUCH PURCHASE OR (II) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.
ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO ACQUIRING THIS SUBORDINATED NOTE OR ANY INTEREST HEREIN.
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No. [●] CUSIP: [●]
ISIN: [●]
COLONY BANKCORP, INC.
5.25% FIXED-TO-FLOATING RATE SUBORDINATED NOTE DUE 2032
1.Subordinated Notes. This Subordinated Note is one of an issue of notes of Colony Bankcorp, Inc., a Georgia corporation (the “Company”), designated as the “5.25% Fixed-to-Floating Rate Subordinated Notes due 2032” (the “Subordinated Notes”) issued pursuant to that Subordinated Note Purchase Agreement, dated as of the date upon which this Subordinated Note was originally issued (the “Issue Date”), between the Company and the several purchasers of the Subordinated Notes identified in the signature pages thereto (the “Purchase Agreement”).
2.Payment. The Company, for value received, promises to pay to [●], or its registered assigns, as nominee of The Depository Trust Company or its registered assigns (“DTC”), the principal sum of [●] (U.S.) ($[●]), plus accrued but unpaid interest on May 20, 2032 (the “Maturity Date”) and to pay interest thereon (i) from and including the Issue Date of the Subordinated Notes to but excluding May 20, 2027 or the earlier redemption date contemplated by Section 4 of this Subordinated Note (the “Fixed Rate Period”), at the rate of 5.25% per annum, computed on the basis of a 360-day year consisting of twelve 30-day months and payable semi-annually in arrears on June 30 and December 30 of each year (each payment date, a “Fixed Interest Payment Date”), beginning June 30, 2022, and (ii) from and including May 20, 2027 to but excluding the Maturity Date or earlier redemption date contemplated by Section 4 of this Subordinated Note (the “Floating Rate Period”), at the rate per annum, reset quarterly, equal to the Floating Interest Rate (as defined below) determined on the Floating Interest Determination Date (as defined below) of the applicable interest period plus 265 basis points, computed on the basis of a 360-day year and the actual number of days elapsed and payable quarterly in arrears (each quarterly period a “Floating Interest Period”) on March 30, June 30, September 30 and December 30 of each year (each payment date, a “Floating Interest Payment Date”). Dollar amounts resulting from this calculation shall be rounded to the nearest cent, with one-half cent being rounded up. The term “Floating Interest Determination Date” means the date upon which the Floating Interest Rate is determined by the Calculation Agent (as defined below) pursuant to the Three-Month Term SOFR Conventions (as defined below).
(a)An “Interest Payment Date” is either a Fixed Interest Payment Date or a Floating Interest Payment Date, as applicable.
(b)The “Floating Interest Rate” means:
(i)initially Three-Month Term SOFR (as defined below).
(ii)Notwithstanding the foregoing clause (i) of this Section 2(b):
(1)If the Calculation Agent determines prior to the relevant Floating Interest Determination Date that a Benchmark Transition Event and its related Benchmark Replacement Date (each of such terms as defined below) have occurred with respect to Three-Month Term SOFR, then the Company shall promptly provide notice of such determination to the Noteholders and Section 2(c) will thereafter apply to all determinations, calculations and quotations made or obtained for the purposes of calculating the Floating Interest Rate payable on the Subordinated Notes during a relevant Floating Interest Period.
(2)However, if the Calculation Agent, determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR, but for any reason the Benchmark Replacement has not been determined as of the relevant Floating Interest Determination Date, the Floating Interest Rate for the applicable Floating Interest Period will be equal to the Floating Interest Rate on the last Floating Interest Determination Date for the Subordinated Notes, as determined by the Calculation Agent.
(iii)If the then-current Benchmark is Three-Month Term SOFR and any of the foregoing provisions concerning the calculation of the Floating Interest Rate and the payment of interest during the Floating Rate Period are inconsistent with any of the Three-Month Term SOFR Conventions (as defined below) determined by the Company, then the relevant Three-Month Term SOFR Conventions will apply.
(iv)Notwithstanding any other provision of the Subordinated Notes, in the event that the Floating Interest Rate for any Floating Rate Period, as determined in accordance with this Section 2, is less than zero (0) on any Floating Interest Determination Date, the Floating Interest Rate for the immediately following Floating Interest Period shall be deemed to be zero (0).
(c)Effect of Benchmark Transition Event.
(i)If the Calculation Agent determines that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time (as defined below) in respect of any determination of the Benchmark (as defined below) on any date, the Benchmark Replacement will replace the then-current Benchmark for all purposes relating to the Subordinated Notes during the relevant Floating Interest Period in respect of such determination on such date and all determinations on all subsequent dates.
(ii)In connection with the implementation of a Benchmark Replacement, the Company will have the right to make Benchmark Replacement Conforming Changes from time to time, and such changes shall become effective without consent from the relevant Noteholders (as defined below) or any other party.
(iii)Any determination, decision or election that may be made by the Company or by the Calculation Agent pursuant to the benchmark transition provisions set forth herein, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date, and any decision to take or refrain from taking any action or any selection:
(1)will be conclusive and binding absent manifest error;
(2)if made by the Company, as the Calculation Agent, will be made in the Company’s sole discretion;
(3)if made by the Calculation Agent that is not the Company, will be made after consultation with the Company, and the Calculation Agent will not make any such determination, decision or election to which the Company reasonably objects; and
(4)notwithstanding anything to the contrary in this Subordinated Note or the Purchase Agreement, shall become effective without consent from the relevant Noteholders (as defined below) or any other party.
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(iv)If the Calculation Agent fails to make any determination, decision or election that it is required to make under the terms of the Subordinated Notes, then the Company will make such determination, decision or election on the same basis as described above.
(v)For the avoidance of doubt, after a Benchmark Transition Event and its related Benchmark Replacement Date have occurred, the Floating Interest Rate shall be an annual rate equal to the sum of the applicable Benchmark Replacement plus 265 basis points.
(vi)As used in this Subordinated Note:
(1)“Benchmark” means, initially, Three-Month Term SOFR; provided that if the Calculation Agent determines on or prior to the Reference Time that a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement.
(2)“Benchmark Replacement” means the Interpolated Benchmark with respect to the then-current Benchmark, plus the Benchmark Replacement Adjustment for such Benchmark; provided that if (a) the Calculation Agent cannot determine the Interpolated Benchmark as of the Benchmark Replacement Date or (b) the then-current Benchmark is Three-Month Term SOFR and a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to Three-Month Term SOFR (in which event no Interpolated Benchmark with respect to Three-Month Term SOFR shall be determined), then “Benchmark Replacement” means the first alternative set forth in the order below that can be determined by the Calculation Agent, as of the Benchmark Replacement Date:
a.Compounded SOFR;
b.the sum of: (i) the alternate rate of interest that has been selected or recommended by the Relevant Governmental Body as the replacement for the then-current Benchmark for the applicable Corresponding Tenor and (ii) the Benchmark Replacement Adjustment;
c.the sum of: (i) the ISDA Fallback Rate and (ii) the Benchmark Replacement Adjustment;
d.the sum of: (i) the alternate rate of interest that has been selected by the Calculation Agent as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to any industry-accepted rate of interest as a replacement for the then-current Benchmark for U.S. dollar denominated floating rate notes at such time and (ii) the Benchmark Replacement Adjustment.
If the Benchmark Replacement, as determined pursuant to this Subordinated Note would be less than zero (0), the Benchmark Replacement will be deemed to be zero (0).
(3)“Benchmark Replacement Adjustment” means the first alternative set forth in the order below that can be determined by the Calculation Agent, as of the Benchmark Replacement Date:
a.the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected or recommended by the Relevant Governmental Body for the applicable Unadjusted Benchmark Replacement;
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b.if the applicable Unadjusted Benchmark Replacement is equivalent to the ISDA Fallback Rate, then the ISDA Fallback Adjustment;
c.the spread adjustment (which may be a positive or negative value or zero) that has been selected by the Calculation Agent giving due consideration to any industry-accepted spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the then-current Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. dollar denominated floating rate notes at such time.
(4)“Benchmark Replacement Conforming Changes” means, with respect to any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “Floating Interest Period,” timing and frequency of determining rates with respect to each Floating Interest Period and making payments of interest, rounding of amounts or tenors and other administrative matters) that the Calculation Agent decides may be appropriate to reflect the adoption of such Benchmark Replacement in a manner substantially consistent with market practice (or, if the Calculation Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Calculation Agent determines that no market practice for use of the Benchmark Replacement exists, in such other manner as the Calculation Agent determines is reasonably necessary).
(5)“Benchmark Replacement Date” means the earliest to occur of the following events with respect to the then-current Benchmark:
a.in the case of clause (a) of the definition of “Benchmark Transition Event,” the relevant Reference Time in respect of any determination;
b.in the case of clause (b) or (c) of the definition of “Benchmark Transition Event,” the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of the Benchmark permanently or indefinitely ceases to provide the Benchmark; or
c.in the case of clause (d) of the definition of “Benchmark Transition Event,” the date of such public statement or publication of information referenced therein.
For the avoidance of doubt, if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for purposes of such determination.
(6)“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
a.if the Benchmark is Three-Month Term SOFR, (i) the Relevant Governmental Body has not selected or recommended a forward-looking term rate for a tenor of three months based on SOFR, (ii) the development of a forward-looking term rate for a tenor of three months based on SOFR that has been recommended or selected by the Relevant Governmental Body is not complete, or (iii) the Company determines that the use of a forward-looking rate for a tenor of three months based on SOFR is not administratively feasible;
b.a public statement or publication of information by or on behalf of the administrator of the Benchmark announcing that such administrator has ceased or will cease to provide the Benchmark, permanently or indefinitely, provided that, at the
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time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark;
c.a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark, the central bank for the currency of the Benchmark, an insolvency official with jurisdiction over the administrator for the Benchmark, a resolution authority with jurisdiction over the administrator for the Benchmark or a court or an entity with similar insolvency or resolution authority over the administrator for the Benchmark, which states that the administrator of the Benchmark has ceased or will cease to provide the Benchmark permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Benchmark; or
d.a public statement or publication of information by the regulatory supervisor for the administrator of the Benchmark announcing that the Benchmark is no longer representative.
(7)“Calculation Agent” means such bank or other entity (which may be the Company or an Affiliate of the Company) as may be appointed by the Company to act as Calculation Agent for the Subordinated Notes during the Floating Rate Period.
(8)“Compounded SOFR” means the compounded average of SOFRs for the applicable Corresponding Tenor, with the rate, or methodology for this rate, and conventions for this rate being established by the Calculation Agent or its designee in accordance with:
a.the rate, or methodology for this rate, and conventions for this rate selected or recommended by the Relevant Governmental Body for determining compounded SOFR; provided that:
b.if, and to the extent that, the Calculation Agent determines that Compounded SOFR cannot be determined in accordance with clause (a) above, then the rate, or methodology for this rate, and conventions for this rate that have been selected by the Calculation Agent giving due consideration to any industry-accepted market practice for U.S. dollar denominated floating rate notes at such time.
For the avoidance of doubt, the calculation of Compounded SOFR will exclude the Benchmark Replacement Adjustment (if applicable) and the spread of 265 basis points per annum.
(9)“Corresponding Tenor” with respect to a Benchmark Replacement means a tenor (including overnight) having approximately the same length (disregarding Business Day adjustment) as the applicable tenor for the then-current Benchmark.
(10)“FRBNY” means the Federal Reserve Bank of New York.
(11)“FRBNY’s Website” means the website of the FRBNY at http://www.newyorkfed.org, or any successor source.
(12)“Interpolated Benchmark” with respect to the Benchmark means the rate determined for the Corresponding Tenor by interpolating on a linear basis between: (1) the Benchmark for the longest period (for which the Benchmark is available) that is shorter than the Corresponding Tenor and (2) the Benchmark for the shortest period (for which the Benchmark is available) that is longer than the Corresponding Tenor.
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(13)“ISDA” means the International Swaps and Derivatives Association, Inc. or any successor thereto.
(14)“ISDA Definitions” means the 2006 ISDA Definitions published by the ISDA or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time.
(15)“ISDA Fallback Adjustment” means the spread adjustment (which may be a positive or negative value or zero) that would apply for derivatives transactions referencing the ISDA Definitions to be determined upon the occurrence of an index cessation event with respect to the Benchmark for the applicable tenor.
(16)“ISDA Fallback Rate” means the rate that would apply for derivatives transactions referencing the ISDA Definitions to be effective upon the occurrence of an index cessation date with respect to the Benchmark for the applicable tenor excluding the applicable ISDA Fallback Adjustment.
(17)“Reference Time” with respect to any determination of a Benchmark means (a) if the Benchmark is Three-Month Term SOFR, the time determined by the Calculation Agent after giving effect to the Three-Month Term SOFR Conventions, and (b) if the Benchmark is not Three-Month Term SOFR, the time determined by the Calculation Agent after giving effect to the Benchmark Replacement Conforming Changes.
(18)“Relevant Governmental Body” means the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and/or the FRBNY, or a committee officially endorsed or convened by the Federal Reserve and/or the FRBNY or any successor thereto.
(19)“SOFR” means the daily Secured Overnight Financing Rate provided by the FRBNY, as the administrator of the Benchmark (or a successor administrator), on the FRBNY’s Website (or such successor’s website).
(20)“Term SOFR” means the forward-looking term rate for the Corresponding Tenor based on SOFR that has been selected or recommended by the Relevant Governmental Body.
(21)“Term SOFR Administrator” means any entity designated by the Relevant Governmental Body as the administrator of Term SOFR (or a successor administrator).
(22)“Three-Month Term SOFR” means the rate for Term SOFR for a tenor of three months that is published by the Term SOFR Administrator at the Reference Time for any Floating Interest Period, as determined by the Calculation Agent after giving effect to the Three-Month Term SOFR Conventions.
(23)“Three-Month Term SOFR Conventions” means any determination, decision or election with respect to any technical, administrative or operational matter (including with respect to the manner and timing of the publication of Three-Month Term SOFR, or changes to the definition of “Floating Interest Period”, timing and frequency of determining Three-Month Term SOFR with respect to each Floating Interest Period and making payments of interest, rounding of amounts or tenors, and other administrative matters) that the Calculation Agent decides may be appropriate to reflect the use of Three-Month Term SOFR as the Benchmark in a manner substantially consistent with market practice (or, if the Calculation Agent decides that adoption of any portion of such market practice is not administratively
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feasible or if the Calculation Agent determines that no market practice for the use of Three-Month Term SOFR exists, in such other manner as the Calculation Agent determines is reasonably necessary).
(24)“Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding the Benchmark Replacement Adjustment.
(d)In the event that any Fixed Interest Payment Date during the Fixed Rate Period falls on a day that is not a Business Day (as defined below), the interest payment due on that date shall be postponed to the next day that is a Business Day and no additional interest shall accrue as a result of that postponement. In the event that any Floating Interest Payment Date during the Floating Rate Period falls on a day that is not a Business Day (as defined below), the interest payment due on that date shall be postponed to the next day that is a Business Day and interest shall accrue to but excluding the date interest is paid. However, if the postponement would cause the day to fall in the next calendar month during the Floating Interest Period, the Floating Interest Payment Date shall instead be brought forward to the immediately preceding Business Day. The term “Business Day” means any day other than a Saturday or Sunday or any other day on which banking institutions in the State of Georgia are generally authorized or required by law or executive order to be closed.
(e)The Company shall take such actions as are necessary to ensure that from the commencement of the Floating Rate Period for so long as any of the Subordinated Notes remain outstanding there will at all times be a Calculation Agent, and if at any time there shall be no Calculation Agent appointed, the Company shall serve as Calculation Agent.
3.Subordination.
(a)The indebtedness of the Company evidenced by this Subordinated Note, including the principal and interest on this Subordinated Note, shall be subordinate and junior in right of payment to the prior payment in full of all existing claims of creditors of the Company whether now outstanding or subsequently created, assumed, guaranteed or incurred (collectively, “Senior Indebtedness”), which shall consist of principal of (and premium, if any) and interest, if any, on: (i) all indebtedness and obligations of, or guaranteed or assumed by, the Company for money borrowed, whether or not evidenced by bonds, debentures, securities, notes or other similar instruments, and including, but not limited to, all obligations to the Company’s general and secured creditors; (ii) any deferred obligations of the Company for the payment of the purchase price of property or assets acquired other than in the ordinary course of business; (iii) all obligations, contingent or otherwise, of the Company in respect of any letters of credit, bankers’ acceptances, security purchase facilities and similar direct credit substitutes; (iv) any capital lease obligations of the Company; (v) all obligations of the Company in respect of interest rate swap, cap or other agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts, commodity contracts and other similar arrangements or derivative products; (vi) any obligations of the Company to its general creditors, as defined for purposes of the capital adequacy regulations of the Federal Reserve applicable to the Company, as the same may be amended or modified from time to time; (vii) all obligations that are similar to those in clauses (i) through (vi) of other persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise arising from an off-balance sheet guarantee; (viii) all obligations of the types referred to in clauses (i) through (vii) of other persons secured by a lien on any property or asset of the Company; and (ix) in the case of (i) through (viii) above, all amendments, renewals, extensions, modifications and refundings of such indebtedness and obligations; except “Senior Indebtedness” does not include (A) the Subordinated Notes, (B) any obligation that by its terms expressly is junior to, or ranks equally in right of payment with, the Subordinated Notes, (C) the existing junior subordinated debentures of the Company (underlying the outstanding trust preferred securities issued by subsidiary trusts of
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the Company) as of the date of the issuance of this Subordinated Note, to which this Subordinated Note shall be senior, or (D) any indebtedness between the Company and any of its subsidiaries or Affiliates. This Subordinated Note is not secured by any assets of the Company or any of its subsidiaries or Affiliates. The term “Affiliate(s)” means, with respect to any Person (as such term is defined in the Purchase Agreement), such Person’s immediate family members, partners, members or parent and subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and their respective Affiliates.
(b) In the event of liquidation of the Company, holders of Senior Indebtedness of the Company shall be entitled to be paid in full with such interest as may be provided by law before any payment shall be made on account of principal of or interest on this Subordinated Note. Additionally, in the event of any insolvency, dissolution, assignment for the benefit of creditors or any liquidation or winding up of or relating to the Company, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment shall be made on account of the principal of or interest on the Subordinated Notes, including this Subordinated Note. In the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated Notes from time to time (each a “Noteholder” and, collectively, the “Noteholders”), together with the holders of any obligations of the Company ranking on parity with the Subordinated Notes, shall be entitled to be paid from the remaining assets of the Company the unpaid principal thereof, and the unpaid interest thereon before any payment or other distribution, whether in cash, property or otherwise, shall be made (i) with respect to any obligation that by its terms expressly is junior to in the right of payment to the Subordinated Notes, (ii) with respect to the existing junior subordinated debentures of the Company (underlying the outstanding trust preferred securities) as of the date of the issuance of this Subordinated Note to which this Subordinated Note shall be senior, (iii) with respect to any indebtedness between the Company and any of its subsidiaries or Affiliates or (iv) on account of any capital stock.
(c) If there shall have occurred and be continuing (i) a default in any payment with respect to any Senior Indebtedness or (ii) an event of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default or event of default shall have been cured or waived or shall have ceased to exist, no payments shall be made by the Company with respect to the Subordinated Notes notwithstanding the provisions of Section 18 hereof. The provisions of this paragraph shall not apply to any payment with respect to which Section 3(b) would be applicable.
(d) Nothing herein shall act to prohibit, limit or impede the Company from issuing additional debt of the Company having the same rank as the Subordinated Notes or which may be junior or senior in rank to the Subordinated Notes. Each Noteholder, by its acceptance hereof, agrees to and shall be bound by the provisions of this Section 3. Each Noteholder, by its acceptance hereof, further acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration for each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of the Subordinated Notes, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness, and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold or in continuing to hold such Senior Indebtedness.
4.Redemption.
(a)Redemption Prior to Fifth Anniversary. This Subordinated Note shall not be redeemable by the Company in whole or in part prior to May 20, 2027, except in the event of:
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(i) a Tier 2 Capital Event (as defined below); (ii) a Tax Event (as defined below); or (iii) an Investment Company Event (as defined below). Upon the occurrence of a Tier 2 Capital Event, a Tax Event or an Investment Company Event, the Company may redeem this Subordinated Note, subject to Section 4(f) hereof, in whole, but not in part, at any time, upon giving not less than ten (10) calendar days’ notice to the Noteholder at an amount equal to 100% of the outstanding principal amount being redeemed plus accrued but unpaid interest, to but excluding the redemption date. “Tier 2 Capital Event” means the Company’s good faith determination that, as a result of (1) any amendment to, or change in, the laws, rules or regulations of the United States (including, for the avoidance of doubt, any agency or instrumentality of the United States, including the Federal Reserve and other federal bank regulatory agencies) or any political subdivision of or in the United States that is enacted or becomes effective after the issue date of this Subordinated Note, (2) any proposed change in those laws, rules or regulations that is announced or becomes effective after the issue date of this Subordinated Note, or (3) any official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws, rules, regulations, policies or guidelines with respect thereto that is announced after the issue date of this Subordinated Note, there is more than an insubstantial risk that the Company will not be entitled to treat the Subordinated Notes then Outstanding as Tier 2 capital (or its equivalent) for purposes of capital adequacy guidelines of the Federal Reserve Board, as then in effect and applicable to the Company (“Tier 2 Capital”), for so long as any Subordinated Notes are Outstanding. “Tax Event” means the receipt by the Company of an opinion of independent tax counsel experienced in such matters to the effect that as a result of (1) an amendment to or change (including any announced prospective amendment or change) in any law or treaty, or any regulation thereunder, of the United States or any of its political subdivisions or taxing authorities; (2) a judicial decision, administrative action, official administrative pronouncement, ruling, regulatory procedure, regulation, notice or announcement, including any notice or announcement of intent to adopt or promulgate any ruling, regulatory procedure or regulation (any of the foregoing, an “Administrative or Judicial Action”); or (3) an amendment to or change in any official position with respect to, or any interpretation of, an Administrative or Judicial Action or a law or regulation of the United States that differs from the previously generally accepted position or interpretation, in each case, which change or amendment or challenge becomes effective or which pronouncement, decision or challenge is announced on or after the issue date of this Subordinated Note, there is more than an insubstantial risk that interest payable by the Company on the Subordinated Notes is not, or within 90 days of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes. “Investment Company Event” means receipt by the Company of an opinion of independent counsel experienced in such matters to the effect that there is more than an insubstantial risk that the Company is or, within 90 days of the date of such legal opinion will be, considered an “investment company” that is required to be registered under the Investment Company Act of 1940, as amended.
(b)Redemption on or after Fifth Anniversary. On or after May 20, 2027, subject to the provisions of Section 4(f) hereof, this Subordinated Note shall be redeemable at the option of and by the Company, in whole or in part at any time and from time to time upon any Interest Payment Date, at an amount equal to 100% of the outstanding principal amount being redeemed plus accrued but unpaid interest, to but excluding the redemption date, but in all cases in a principal amount with integral multiples of $1,000. In addition, the Company may redeem all or a portion of the Subordinated Notes, at any time upon the occurrence of a Tier 2 Capital Event, a Tax Event or an Investment Company Event. The redemption referenced in this Section 4(b) shall be subject to the receipt of any required regulatory approval.
(c)Partial Redemption. If less than the then outstanding principal amount of this Subordinated Note is redeemed, (i) a new Subordinated Note shall be issued representing the unredeemed portion without charge to the Noteholder thereof, and (ii) such redemption shall be effected on a pro rata basis as to the Noteholders. For purposes of clarity, upon a partial
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redemption, a like percentage of the principal amount of every Subordinated Note held by every Noteholder shall be redeemed.
(d)No Redemption at Option of Noteholder. This Subordinated Note is not subject to redemption at the option of the Noteholder.
(e)Effectiveness of Redemption. If notice of redemption has been duly given and notwithstanding that this Subordinated Note has been called for redemption but has not yet been surrendered for cancellation, on and after the date fixed for redemption interest shall cease to accrue on the portion of this Subordinated Note called for redemption, this Subordinated Note shall no longer be deemed outstanding with respect to the portion called for redemption and all rights with respect to the portion of this Subordinated Note called for redemption shall forthwith on such date fixed for redemption cease and terminate unless the Company shall default in the payment of the redemption price, except only the right of the Noteholder to receive the amount payable on such redemption, without interest. For purposes of clarity, any redemption made pursuant to the terms of this Subordinated Note shall be made on a pro rata basis, and, for purposes of a redemption processed through DTC, in accordance with its rules and procedures, as a “Pro Rata Pass-Through Distribution of Principal.”
(f)Regulatory Approvals. Any such redemption shall be subject to receipt of any and all required federal and state regulatory approvals or non-objections, including, but not limited to, the consent of the Federal Reserve. In the case of any redemption of this Subordinated Note pursuant to paragraph (b) of this Section 4, the Company will give the Noteholder notice of redemption, which notice shall indicate the aggregate principal amount of Subordinated Notes to be redeemed, not less than thirty (30) nor more than forty-five (45) calendar days prior to the redemption date.
(g)Purchase and Resale of the Subordinated Notes. Subject to any required federal and state regulatory approvals and the provisions of this Subordinated Note, the Company shall have the right to purchase any of the Subordinated Notes at any time in the open market, private transactions or otherwise. If the Company purchases any Subordinated Notes, it may, in its discretion, hold, resell or cancel any of the purchased Subordinated Notes.
5.Global Subordinated Notes.
(a) The Subordinated Notes shall be issued in the form of one or more Global Subordinated Notes (each a “Global Subordinated Note”) registered in the name of DTC or another organization registered as a clearing agency under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and designated as Depositary by the Company or any successor thereto (the “Depositary”) or a nominee thereof and delivered to such Depositary or a nominee thereof.
(b) Notwithstanding any other provision herein, no Global Subordinated Note may be exchanged in whole or in part for Subordinated Notes registered, and no transfer of a Global Subordinated Note in whole or in part may be registered, in the name of any person other than the Depositary for such Global Subordinated Note or a nominee thereof unless (i) such Depositary advises the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Subordinated Note, and no qualified successor is appointed by the Company within ninety (90) calendar days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) calendar days after obtaining knowledge of such event, (iii) the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default (as defined in Section 6) shall have occurred and be continuing. Upon the occurrence of any event specified in
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clause (i), (ii), (iii) or (iv) of this Section 5(b), the Company or its agent shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Subordinated Note of the occurrence of such event and of the availability of Subordinated Notes to such owners of beneficial interests requesting the same.
(c) If any Global Subordinated Note is to be exchanged for other Subordinated Notes or canceled in part, or if another Subordinated Note is to be exchanged in whole or in part for a beneficial interest in any Global Subordinated Note, then either (i) such Global Subordinated Note shall be so surrendered for exchange or cancellation as provided in this Section 5 or (ii) the principal amount thereof shall be reduced or increased by an amount equal to the portion thereof to be so exchanged or canceled, or equal to the principal amount of such other Subordinated Note to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Company or, if applicable, the Company’s registrar and transfer agent (the “Registrar”), whereupon the Company or, if applicable, the Registrar, in accordance with the applicable rules and procedures of the Depositary (“Applicable Depositary Procedures”), shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Subordinated Note by the Depositary, accompanied by registration instructions, the Company shall execute and deliver any Subordinated Notes issuable in exchange for such Global Subordinated Note (or any portion thereof) in accordance with the instructions of the Depositary.
(d) Every Subordinated Note executed and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Subordinated Note or any portion thereof shall be executed and delivered in the form of, and shall be, a Global Subordinated Note, unless such Subordinated Note is registered in the name of a person other than the Depositary for such Global Subordinated Note or a nominee thereof.
(e) The Depositary or its nominee, as the registered owner of a Global Subordinated Note, shall be the holder of such Global Subordinated Note for all purposes under this Subordinated Note, and owners of beneficial interests in a Global Subordinated Note shall hold such interests pursuant to Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Subordinated Note shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary participants. If applicable, the Registrar shall be entitled to deal with the Depositary for all purposes relating to a Global Subordinated Note (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole holder of the Subordinated Note and shall have no obligations to the owners of beneficial interests therein. The Registrar shall have no liability in respect of any transfers undertaken by the Depositary.
(f) The rights of owners of beneficial interests in a Global Subordinated Note shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its participants.
(g) No holder of any beneficial interest in any Global Subordinated Note held on its behalf by a Depositary shall have any rights with respect to such Global Subordinated Note, and such Depositary may be treated by the Company and any agent of the Company as the owner of such Global Subordinated Note for all purposes whatsoever. Neither the Company nor any agent of the Company will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Subordinated Note or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company or any agent of the Company from giving effect to any written certification, proxy or
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other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as holder of any Subordinated Note.
6.Events of Default; Acceleration.
Each of the following events shall constitute an “Event of Default”:
(a)the entry of a decree or order for relief in respect of the Company by a court having jurisdiction in the premises in an involuntary case or proceeding under any applicable bankruptcy, insolvency, or reorganization law, now or hereafter in effect of the United States or any political subdivision thereof, and such decree or order will have continued unstayed and in effect for a period of sixty (60) consecutive calendar days;
(b)the commencement by the Company of a voluntary case under any applicable bankruptcy, insolvency or reorganization law, now or hereafter in effect of the United States or any political subdivision thereof, or the consent by the Company to the entry of a decree or order for relief in an involuntary case or proceeding under any such law;
(c)the Company (i) becomes insolvent or is unable to pay its debts as they mature, (ii) makes an assignment for the benefit of creditors, (iii) admits in writing its inability to pay its debts as they mature, or (iv) ceases to be a bank holding company or financial holding company under the Bank Holding Company Act of 1956, as amended;
(d)the failure of the Company to pay any installment of interest on any of the Subordinated Notes as and when the same will become due and payable, and the continuation of such failure for a period of fifteen (15) consecutive calendar days;
(e)the failure of the Company to pay all or any part of the principal of any of the Subordinated Notes as and when the same will become due and payable;
(f)the liquidation of the Company (for the avoidance of doubt, “liquidation” does not include any merger, consolidation, sale of equity or assets or reorganization (exclusive of a reorganization in bankruptcy) of the Company or any of its subsidiaries);
(g)the failure of the Company to perform any other covenant or agreement on the part of the Company contained in the Subordinated Notes, and the continuation of such failure for a period of thirty (30) consecutive calendar days after the date on which notice specifying such failure, stating that such notice is a “Notice of Default” hereunder and demanding that the Company remedy the same, will have been given, in the manner set forth in Section 22, to the Company by a Noteholder; or
(h)the default by the Company under any bond, debenture, note or other evidence of indebtedness for money borrowed by the Company having an aggregate principal amount outstanding of at least $25,000,000, whether such indebtedness now exists or is created or incurred in the future, which default (i) constitutes a failure to pay any portion of the principal of such indebtedness when due and payable after the expiration of any applicable grace period or (ii) results in such indebtedness becoming due or being declared due and payable prior to the date on which it otherwise would have become due and payable without, in the case of clause (i), such indebtedness having been discharged or, in the case of clause (ii), without such indebtedness having been discharged or such acceleration having been rescinded or annulled.
Unless the principal amount of this Subordinated Note already shall have become due and payable, if an Event of Default set forth in Section 6(a) or Section 6(b) shall have occurred and
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be continuing, the Noteholder, by notice in writing to the Company, may declare the principal amount of this Subordinated Note to be due and payable immediately and, upon any such declaration, the same shall become and shall be immediately due and payable, and the Company waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices. Notwithstanding the foregoing, because the Company will treat the Subordinated Notes as Tier 2 Capital, upon the occurrence of an Event of Default other than an Event of Default described in Section 6(a) or Section 6(b), no Noteholder may accelerate the Maturity Date of the Subordinated Notes and make the principal of, and any accrued and unpaid interest on, the Subordinated Notes, immediately due and payable. The Company, within forty-five (45) calendar days after the receipt of written notice from any Noteholder of the occurrence of an Event of Default with respect to this Subordinated Note, shall mail to all Noteholders, at their addresses shown on the Security Register (as defined in Section 14), such written notice of Event of Default, unless such Event of Default shall have been cured or waived before the giving of such notice as certified by the Company in writing.
7.Failure to Make Payments. In the event of an Event of Default under Section 6(c), Section 6(d) or Section 6(e), the Company will, upon demand of the Noteholder, pay to the Noteholder the amount then due and payable on this Subordinated Note for principal and interest (without acceleration of the Subordinated Note in any manner), with interest on the overdue principal and interest at the per annum rate borne by this Subordinated Note, to the extent permitted by applicable law. If the Company fails to pay such amount upon such demand, the Noteholder may, among other things, institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the amounts adjudged or decreed to be payable in the manner provided by law out of the property of the Company.
Upon the occurrence of a failure by the Company to make any required payment of principal or interest on this Subordinated Note or an Event of Default, until such failure or Event of Default is cured by the Company or waived by the Noteholders in accordance with Section 18 hereof, except as may be required by any federal or state bank regulatory agency, the Company shall not: (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company’s capital stock; (b) make any payment of principal or interest or premium, if any, on or repay, repurchase or redeem any indebtedness of the Company that ranks equal with or junior to the Subordinated Notes; or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than: (i) any dividends or distributions payable solely in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of the Company’s common stock; (ii) any declaration of a non-cash dividend in connection with the implementation of a shareholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto; (iii) as a result of a reclassification of the Company’s capital stock or the exchange or conversion of one class or series of the Company’s capital stock for another class or series of the Company’s capital stock; (iv) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged; or (v) purchases of any class of the Company’s common stock related to the issuance of common stock or rights under any benefit plans for the Company’s directors, officers or employees or any of the Company’s dividend reinvestment plans (the foregoing clauses (i) through (v) are collectively referred to as the “Permitted Dividends”).
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8.Affirmative Covenants of the Company.
(a)Notice of Certain Events. To the extent permitted by applicable statute, rule or regulation, the Company shall provide written notice to the Noteholder of the occurrence of any of the following events as soon as practicable, but in no event later than fifteen (15) Business Days following the Company becoming aware of the occurrence of such event:
(i)The Company is less than “well-capitalized” as defined under the then applicable regulatory capital standards or the total risk-based capital ratio, Tier 1 risk-based capital ratio, common equity Tier 1 risk-based capital ratio or leverage ratio of the Company (but only to the extent the Company is required to measure and report such ratios on a consolidated basis under applicable law) or of any of the foregoing capital or leverage ratios of the Bank becomes less than ten percent (10.0%), eight percent (8.0%), six and one-half percent (6.5%), or five percent (5.0%), respectively, at quarter end;
(ii)The Company, or any of the Company’s subsidiaries, or any officer of the Company (in such capacity), becomes subject to any formal, written regulatory enforcement action (as defined by the applicable state or federal bank regulatory authority);
(iii)The appointment, resignation, removal or termination of the chief executive officer, president, chief operating officer, or chief financial officer of the Company (provided, however, that the Company reporting any such event on a Form 8-K filed with the U.S. Securities and Exchange Commission shall be deemed notice to the Noteholder);
(iv)The dollar amount of any nonperforming assets of the Company on a consolidated basis as a percentage of the Company’s total loan portfolio exceeds four percent (4.0%) at quarter end; or
(v)There is a change in ownership of twenty-five percent (25%) or more of the outstanding securities of the Company entitled to vote for the election of directors.
(b)Payment of Principal and Interest. The Company covenants and agrees for the benefit of the Noteholder that it will duly and punctually pay the principal of, and interest on, this Subordinated Note, in accordance with the terms hereof.
(c)Maintenance of Office. The Company will maintain an office or agency in Fitzgerald, Georgia where Subordinated Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Subordinated Notes may be served.
The Company may also from time to time designate one or more other offices or agencies where the Subordinated Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the State of Georgia. The Company will give prompt written notice to the Noteholders of any such designation or rescission and of any change in the location of any such other office or agency.
(d)Corporate Existence. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect: (i) the corporate existence of the Company; (ii) the existence (corporate or other) of each subsidiary; and (iii) the rights (constituent governing documents and statutory), licenses and franchises of the Company and each of its subsidiaries; provided, however, that the Company will not be required to preserve the existence (corporate or other) of any of its subsidiaries or any such right, license or franchise of the Company or any of its subsidiaries if the Board of Directors of the Company determines that
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the preservation thereof is no longer desirable in the conduct of the business of the Company and its subsidiaries taken as a whole and that the loss thereof will not be disadvantageous in any material respect to the Noteholders; provided further, that the Company may consummate a merger in which (i) the Company is the surviving entity in the merger, or (ii) if the Company is not the surviving entity, the requirements of Section 9(b) below are satisfied.
(e)Maintenance of Properties. The Company will, and will cause each subsidiary to, cause all its properties used or useful in the conduct of its business to be maintained and kept in good condition, repair and working order and supplied with all necessary equipment and will cause to be made all necessary repairs, renewals, replacements, betterments and improvements thereof, all as in the judgment of the Company may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times; provided, however, that nothing in this Section 8(e) will prevent the Company or any subsidiary from discontinuing the operation and maintenance of any of their respective properties if such discontinuance is, in the reasonable judgment of the Company or of any subsidiary, as the case may be, desirable in the conduct of its business.
(f)Transfer of Voting Stock. Except as contemplated by Section 9(b), the Company will not, nor will it permit Colony Bank (the “Bank”) to, directly or indirectly, sell, assign, transfer or otherwise dispose of any shares of, securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock (as defined below) of the Bank or any successor thereof or any subsidiary of the Company that is a depository institution and that has consolidated assets equal to 30% or more of the Company’s consolidated assets (“Material Subsidiary”), nor will the Company permit the Material Subsidiary to issue any shares of, or securities convertible into, or options, warrants or rights to subscribe for or purchase shares of, Voting Stock of the Material Subsidiary if, in each case, after giving effect to any such transaction and to the issuance of the maximum number of shares of Voting Stock of the Material Subsidiary issuable upon the exercise of all such convertible securities, options, warrants or rights, the Company would cease to own, directly or indirectly, at least 80% of the issued and outstanding Voting Stock of the Material Subsidiary. “Voting Stock” means outstanding shares of capital stock having voting power for the election of directors, whether at all times or only so long as no senior class of stock has such voting power because of default in dividends or other default.
(g)Waiver of Certain Covenants. The Company may omit in any particular instance to comply with any term, provision or condition set forth in Section 8(c), Section 8(d), Section 8(e), or Section 8(f) above, with respect to this Subordinated Note if before the time for such compliance the Noteholders shall have waived, in accordance with Section 18 herein, such compliance in such instance or generally will have waived compliance with such term, provision or condition, but no such waiver will extend to or affect such term, provision or condition except to the extent so expressly waived, and, until such waiver will become effective, the obligations of the Company in respect of any such term, provision or condition will remain in full force and effect.
(h)Tier 2 Capital. Whether or not the Company is subject to consolidated capital requirements under applicable regulations of the Federal Reserve, if all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Company will promptly notify the Noteholders and thereafter, if requested by the Company, the Company and the Noteholders will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained in this Section 8(h)
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shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event pursuant to Section 4(a) or Section 4(b).
(i)Compliance with Laws. The Company shall comply with the requirements of all laws, regulations, orders and decrees applicable to it or its properties, except for such noncompliance that would not reasonably be expected to have a Material Adverse Effect (as such term is defined in the Purchase Agreement).
(j)Taxes and Assessments. The Company shall punctually pay and discharge all material taxes, assessments, and other governmental charges or levies imposed upon it or upon its income or upon any of its properties; provided, that no such taxes, assessments or other governmental charges need be paid if they are being contested in good faith by the Company.
(k)Financial Statements; Access to Records.
(i) Not later than forty-five (45) calendar days following the end of each quarterly period, as applicable, for which the Company has not filed a Quarterly Report on Form 10-Q with the U.S. Securities and Exchange Commission, upon request, the Company shall provide the Noteholder with a copy of the Company’s unaudited consolidated balance sheet and statement of income (loss) for and as of the end of such immediately preceding fiscal quarter, prepared in accordance with past practice. Quarterly financial statements, if required herein, shall be unaudited and need not comply with U.S. generally accepted accounting principles (“GAAP”).
(ii) Not later than one hundred twenty (120) calendar days from the end of each fiscal year for which the Company has not filed a Form 10-K with the U.S. Securities and Exchange Commission, upon request, the Company shall provide the Noteholder with copies of the Company’s audited financial statements consisting of the consolidated balance sheet of the Company as of the fiscal year end and the related statements of income (loss) and retained earnings, stockholders’ equity and cash flows for the fiscal year then ended. Such financial statements shall be prepared in accordance with GAAP applied on a consistent basis throughout the period involved.
(iii) In addition to the foregoing Sections 8(k)(i) and (ii), if a Noteholder holds at least twenty-five percent (25%) in aggregate principal amount (excluding any Subordinated Notes held by Company or any of its Affiliates) of the Subordinated Notes at the time outstanding, the Company agrees to furnish to such Noteholder, upon request, with such financial and business information of the Company and the Bank as such Noteholder may reasonably request as may be reasonably necessary or advisable to allow such Noteholder to confirm compliance by the Company with this Subordinated Note.
(l)Compliance Certificate. The Company will deliver to the Noteholders, within one hundred twenty (120) calendar days after the end of each fiscal year, a certificate of the chief executive, officer, president, chief operating officer or chief financial officer, on behalf of the Company, covering the preceding calendar year, stating whether or not, to the best of his or her knowledge, the Company is in default in the performance and observance of any of the terms, provisions and conditions of this Subordinated Note (without regard to notice requirements or periods of grace) and if the Company will be in default, specifying all such defaults and the nature and status thereof of which he or she may have knowledge.
9.Negative Covenants of the Company.
(a) Limitation on Dividends. The Company shall not declare or pay any dividend or make any distribution on capital stock or other equity securities of any kind of the
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Company if the Company or the Bank is not “well capitalized” as defined under the then applicable regulatory capital standards immediately prior to the declaration of and after giving effect to such dividend or distribution, except for Permitted Dividends.
(b) Merger or Sale of Assets. The Company shall not merge into another entity, effect a Change in Bank Control (as defined below) or convey, transfer or lease substantially all of its properties and assets to any person, unless:
(i)the continuing entity into which the Company is merged or the person that acquires by conveyance or transfer or that leases substantially all of the properties and assets of the Company shall be a corporation, association or other legal entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly assumes the due and punctual payment of the principal of and any premium and interest on the Subordinated Notes according to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of the Company to be performed or observed; provided, however, that no express assumption shall be required by any successor by merger to the Company to the extent such legal successor assumes the Company’s obligations hereunder by operation of law; and
(ii)immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing.
“Change in Bank Control” means the sale, transfer, lease or conveyance by the Company, or an issuance of equity securities by the Bank other than to the Company, in either case resulting in ownership by the Company of less than fifty percent (50%) of the Bank.
10.Denominations. The Subordinated Notes are issuable only in registered form without interest coupons in minimum denominations of $100,000 and integral multiples of $1,000 in excess thereof.
11.Charges and Transfer Taxes. No service charge will be made for any registration of transfer or exchange of this Subordinated Note, or any redemption or repayment of this Subordinated Note, or any conversion or exchange of this Subordinated Note for other types of securities or property, but the Company may require payment of a sum sufficient to pay all taxes, assessments or other governmental charges that may be imposed in connection with the transfer or exchange of this Subordinated Note from the Noteholder requesting such transfer or exchange.
12.Payment Procedures. Payment of the principal and interest payable on the Maturity Date will be made by check, by wire transfer or by Automated Clearing House (ACH) transfer in immediately available funds to a bank account in the United States designated by the Noteholder if such Noteholder shall have previously provided wire instructions to the Company, upon presentation and surrender of this Subordinated Note at the Payment Office (as defined in Section 22) or at such other place or places as the Company shall designate by notice to the Noteholders as the Payment Office, provided that this Subordinated Note is presented to the Company in time for the Company to make such payments in such funds in accordance with its normal procedures. Payments of interest (other than interest payable on the Maturity Date) shall be made by wire transfer or ACH transfer in immediately available funds or check mailed to the Noteholder, as such person’s address appears on the Security Register. Interest payable on any Interest Payment Date shall be payable to the Noteholder in whose name this Subordinated Note is registered at the close of business on the fifteenth (15th) calendar day prior to the applicable Interest Payment Date, without regard to whether such date is a Business Day, except that interest not paid on the Interest Payment Date, if any, will be paid to the holder in whose name
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this Subordinated Note is registered at the close of business on a special record date fixed by the Company (a “Special Record Date”), notice of which shall be given to the Noteholder not less than ten (10) calendar days prior to such Special Record Date. To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Subordinated Note, on any amount of principal or interest on this Subordinated Note not paid when due. All payments on this Subordinated Note shall be applied first against costs and expenses of the Noteholder, if any, for which the Company is liable under this Subordinated Note; then against interest due hereunder; and then against principal due hereunder. The Noteholder acknowledges and agrees that the payment of all or any portion of the outstanding principal amount of this Subordinated Note and all interest hereon shall be pari passu in right of payment and in all other respects to the other Subordinated Notes. In the event that the Noteholder receives payments in excess of its pro rata share of the Company’s payments to the Noteholders of all of the Subordinated Notes, then the Noteholder shall hold in trust all such excess payments for the benefit of the other Noteholders and shall pay such amounts held in trust to such other Noteholders upon demand by such Noteholders.
13.Form of Payment. Payments of principal of and interest on this Subordinated Note shall be made in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts.
14.Registration of Transfer, Security Register. Except as otherwise provided herein, this Subordinated Note is transferable in whole or in part, and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Noteholder in person, or by its attorney duly authorized in writing, at the Payment Office or the offices of the Registrar. The Company or the Registrar shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the “Security Register”). Upon surrender or presentation of this Subordinated Note for exchange or registration of transfer, the Company or the Registrar shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes of like aggregate principal amount, each in a minimum denomination of $100,000 or any amount in excess thereof that is an integral multiple of $1,000 (and, in the absence of an opinion of counsel satisfactory to the Company to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such name or names requested by the Noteholder. Any Subordinated Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated herein, duly executed by the Noteholder or its attorney duly authorized in writing, with such tax identification number or other information for each person in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as the Company may reasonably request to comply with applicable law. No exchange or registration of transfer of this Subordinated Note shall be made on or after (i) the fifteenth (15th) day immediately preceding the Maturity Date or (ii) the due delivery of notice of redemption.
15.Successors and Assigns. This Subordinated Note shall be binding upon the Company and inure to the benefit of the Noteholder and its respective successors and permitted assigns. The Noteholder may assign all, or any part of, or any interest in, the Noteholder’s rights and benefits hereunder only to the extent and in the manner permitted by the terms of this Subordinated Note. To the extent of any such assignment, such assignee shall have the same rights and benefits against the Company and shall agree to be bound by and to comply with the terms and conditions of the Purchase Agreement as it would have had if it were the Noteholder hereunder.
16.Priority. The Subordinated Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding, dissolution, assignment for the benefit of
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creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or similar proceeding or any liquidation or winding up of the Company, with all other present or future unsecured subordinated debt obligations of the Company, except any unsecured subordinated debt that, pursuant to its express terms, is senior or subordinate in right of payment to the Subordinated Notes.
17.Ownership. Prior to due presentment of this Subordinated Note for registration of transfer, the Company may treat the Noteholder in whose name this Subordinated Note is registered in the Security Register as the absolute owner of this Subordinated Note for receiving payments of principal and interest on this Subordinated Note and for all other purposes whatsoever, whether or not this Subordinated Note be overdue, and the Company shall not be affected by any notice to the contrary.
18.Waiver and Consent.
(a)This Subordinated Note may be amended or waived pursuant to, and in accordance with, the provisions set forth herein and as set forth in Section 7.3 of the Purchase Agreement. Any such consent or waiver given by the Noteholder shall be conclusive and binding upon such Noteholder and upon all subsequent holders of this Subordinated Note and of any Subordinated Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Subordinated Note. No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Any insured depository institution that shall be a Noteholder or that otherwise shall have any beneficial ownership interest in this Subordinated Note shall, by its acceptance of such Subordinated Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby.
(b)No waiver or amendment of any term, provision, condition, covenant or agreement in the Subordinated Notes shall be effective except with the consent of the Noteholders holding more than fifty percent (50%) in aggregate principal amount (excluding any Subordinated Notes held by the Company or any of its Affiliates) of the Subordinated Notes at the time outstanding; provided, however, that without the consent of each Noteholder of an affected Subordinated Note, no such amendment or waiver may: (i) reduce the principal amount of any Subordinated Note; (ii) reduce the rate of or change the time for payment of interest on any Subordinated Note; (iii) extend the maturity of any Subordinated Note; (iv) change the currency in which payment of the obligations of the Company under the Subordinated Notes are to be made; (v) lower the percentage of aggregate principal amount of outstanding Subordinated Notes required to approve any amendment of the Subordinated Notes; (vi) make any changes to Section 6 (Events of Default; Acceleration), Section 7 (Failure to Make Payments), Section 16 (Priority), or Section 18 (Waiver and Consent) of the Subordinated Notes that adversely affects the rights of any Noteholder; or (vii) disproportionately and adversely affect the rights of any Noteholder. Notwithstanding the foregoing, the Company may amend or supplement the Subordinated Notes without the consent of the Noteholders to cure any ambiguity, defect or inconsistency or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect the rights of any Noteholder of any of the Subordinated Notes. No failure to exercise or delay in exercising, by any Noteholder of the Subordinated Notes, of any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege preclude any other or further exercise thereof, or the exercise of any other right or remedy provided by law, except as restricted hereby. The rights and remedies provided in this Subordinated Note are cumulative and not exclusive of any right or remedy provided by law or equity. No notice or demand on the Company in any case shall, in itself, entitle the Company to any other or further notice or demand in similar or other circumstances or constitute
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a waiver of the rights of the Noteholders to any other or further action in any circumstances without notice or demand. No consent or waiver, expressed or implied, by the Noteholders to or of any breach or default by the Company in the performance of its obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other breach or default in the performance of the same or any other obligations of the Company hereunder. Failure on the part of the Noteholders to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Noteholders of their rights hereunder or impair any rights, powers or remedies on account of any breach or default by the Company.
19.Absolute and Unconditional Obligation of the Company.
(a)No provisions of this Subordinated Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal and interest on this Subordinated Note at the times, places and rate, and in the coin or currency, herein prescribed.
(b)No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein.
(c)Any insured depository institution that shall be a Noteholder or that otherwise shall have any beneficial ownership interest in this Subordinated Note shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the indebtedness evidenced thereby.
20.No Sinking Fund; Convertibility. This Subordinated Note is not entitled to the benefit of any sinking fund. This Subordinated Note is not convertible into or exchangeable for any of the equity securities, other securities or assets of the Company or any subsidiary of the Company.
21.No Recourse Against Others. No recourse under or upon any obligation, covenant or agreement contained in this Subordinated Note, or for any claim based thereon or otherwise in respect thereof, will be had against any past, present or future shareholder, employee, officer, or director, as such, of the Company or of any predecessor or successor, either directly or through the Company or any predecessor or successor, under any rule of law, statute or constitutional provision or by the enforcement of any assessment or by any legal or equitable proceeding or otherwise, all such liability being expressly waived and released by the acceptance of this Subordinated Note by the Noteholder and as part of the consideration for the issuance of this Subordinated Note.
22.Notices. All notices to the Company under this Subordinated Note shall be in writing and addressed to the Company at 115 South Grant Street, Fitzgerald, Georgia 31750, Attention: Andy Borrmann, Chief Financial Officer, or to such other address as the Company may notify to the Noteholder (the “Payment Office”). All notices to the Noteholders shall be in writing and sent by first-class mail or recognized overnight courier to each Noteholder at such Noteholder’s address as set forth in the Security Register.
23.Further Issues. The Company may, without the consent of the Noteholders, create and issue additional notes having the same terms and conditions of the Subordinated Notes (except for the Issue Date and issue price) so that such further notes shall be consolidated and form a single series with the Subordinated Notes.
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24.Governing Law; Interpretation. THIS SUBORDINATED NOTE WILL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE STATE OF GEORGIA AND WILL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF. THIS SUBORDINATED NOTE IS INTENDED TO MEET THE CRITERIA FOR QUALIFICATION OF THE OUTSTANDING PRINCIPAL AS TIER 2 CAPITAL UNDER THE REGULATORY GUIDELINES OF THE FEDERAL RESERVE, AND THE TERMS HEREOF SHALL BE INTERPRETED IN A MANNER TO SATISFY SUCH INTENT.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has caused this Subordinated Note to be duly executed and attested.
COLONY BANKCORP, INC.
By: _____________________________________
Name: T. Heath Fountain
Title: President and Chief Executive Officer
Name: T. Heath Fountain
Title: President and Chief Executive Officer
ATTEST:
Name: Andy Borrmann
Title: Executive Vice President and
Chief Financial Officer
[Signature Page to Subordinated Note]
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PAYING AGENT’S CERTIFICATE OF AUTHENTICATION
This is one of the Subordinated Notes issued by Colony Bankcorp, Inc. pursuant to a Subordinated Note Purchase Agreement dated May 20, 2022.
Date [●]
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
ASSIGNMENT FORM
To assign this Subordinated Note, fill in the form below: (I) or (we) assign and transfer this Subordinated Note to:
(Print or type assignee’s name, address and zip code)
(Insert assignee’s social security or tax I.D. No.)
and irrevocably appoint agent to transfer this Subordinated Note on the books of the Company. The agent may substitute another to act for him.
Date: Your signature:
(Sign exactly as your name appears on the face of this Subordinated Note)
Tax Identification No:
Signature Guarantee:
(Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)).
The undersigned certifies that it [is / is not] an Affiliate of the Company and that, to its knowledge, the proposed transferee [is / is not] an Affiliate of the Company.
In connection with any transfer or exchange of this Subordinated Note occurring prior to the date that is one year after the later of the date of original issuance of this Subordinated Note and the last date, if any, on which this Subordinated Note was owned by the Company or any Affiliate of the Company, the undersigned confirms that this Subordinated Note is being:
CHECK ONE BOX BELOW:
| □ | (1) | acquired for the undersigned’s own account, without transfer; | ||||||
| □ | (2) | transferred to the Company; | ||||||
| □ | (3) | transferred in accordance and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”); | ||||||
| □ | (4) | transferred under an effective registration statement under the Securities Act; | ||||||
| □ | (5) | transferred in accordance with and in compliance with Regulation S under the Securities Act; | ||||||
| □ | (6) | transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act); | ||||||
| □ | (7) | transferred to an “accredited investor” (as defined in Rule 501(a)(4) under the Securities Act), not referred to in item (6) that has been provided with the information designated under Section 4(d) of the Securities Act; or | ||||||
| □ | (8) | transferred in accordance with another available exemption from the registration requirements of the Securities Act. | ||||||
Unless one of the boxes is checked, the Company will refuse to register this Subordinated Note in the name of any person other than the registered holder thereof; provided, however, that, prior to registering any such transfer of this Subordinated Note, in its sole discretion, such legal opinions, certifications and other information as the Company may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act such as the exemption provided by Rule 144 under such Act.
Signature:
Signature Guarantee:
(Signatures must be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with membership in an approved signature guarantee medallion program), pursuant to Exchange Act Rule 17Ad-l5).
TO BE COMPLETED BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Subordinated Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that
it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.
Date: Signature:
Exhibit 10.1
SUBORDINATED NOTE PURCHASE AGREEMENT
This SUBORDINATED NOTE PURCHASE AGREEMENT (this “Agreement”) is dated as of May 20, 2022, and is made by and among Colony Bankcorp, Inc., a Georgia corporation (the “Company”), and the several purchasers of the Subordinated Notes (as defined herein) identified on the signature pages hereto (each a “Purchaser” and collectively, the “Purchasers”).
RECITALS
WHEREAS, the Company has requested that the Purchasers purchase from the Company up to $40 million in aggregate principal amount of Subordinated Notes, which aggregate amount is intended to qualify as Tier 2 Capital (as defined herein);
WHEREAS, the Company has engaged Performance Trust Capital Partners, LLC as its sole placement agent (“Placement Agent”) for the offering of the Subordinated Notes;
WHEREAS, each of the Purchasers is a QIB (as defined herein);
WHEREAS, the offer and sale of the Subordinated Notes by the Company is being made in reliance upon the exemptions from registration available under Section 4(a)(2) of the Securities Act (as defined herein) and Rule 506(b) of Regulation D (as defined herein); and
WHEREAS, each Purchaser is willing to purchase from the Company a Subordinated Note in the principal amount set forth on such Purchaser’s respective signature page hereto (the “Subordinated Note Amount”) in accordance with the terms, subject to the conditions and in reliance on, the recitals, representations, warranties, covenants and agreements set forth herein and in the Subordinated Notes.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and agreements herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1.DEFINITIONS.
1.1Defined Terms. The following capitalized terms used in this Agreement have the meanings defined or referenced below. Certain other capitalized terms used only in specific sections of this Agreement may be defined in such sections.
“Affiliate(s)” means, with respect to any Person, such Person’s immediate family members, partners, members or parent and Subsidiary corporations, and any other Person directly or indirectly controlling, controlled by, or under common control with said Person and their respective Affiliates.
“Agreement” has the meaning set forth in the preamble hereto.
“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Subordinated Note represented by a global certificate, the rules and procedures of DTC that apply to such transfer or exchange.
“Articles of Incorporation” means the Articles of Incorporation of the Company, as amended, as in effect on the Closing Date.
“Bank” means Colony Bank, a Georgia state banking corporation and wholly-owned subsidiary of the Company.
“Business Day” means any day other than a Saturday, Sunday or any other day on which banking institutions in the State of Georgia are permitted or required by any applicable law or executive order to close.
“Bylaws” means the Amended and Restated Bylaws of the Company, as in effect on the Closing Date.
“Closing” has the meaning set forth in Section 2.2.
“Closing Date” means May 20, 2022.
“Company” has the meaning set forth in the preamble hereto and shall include any successors to the Company.
“Company Covered Person” has the meaning set forth in Section 4.2.4.
“Company’s Reports” means (i) the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC, including the audited financial statements contained therein; (ii) the Company’s Proxy Statement related to its 2022 Annual Meeting of Shareholders, as furnished to the SEC; and (iii) the Company’s Annual Report on Form FR Y-9SP for the year ended December 31, 2021, as filed with the Federal Reserve.
“Disbursement” has the meaning set forth in Section 3.1.
“Disqualification Event” has the meaning set forth in Section 4.2.4.
“DTC” means The Depository Trust Company.
“Equity Interest” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person which is not a corporation, and any and all warrants, options or other rights to purchase any of the foregoing.
“Event of Default” has the meaning set forth in the Subordinated Notes.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FDIC” means the Federal Deposit Insurance Corporation.
“Federal Reserve” means the Board of Governors of the Federal Reserve System.
“GAAP” means generally accepted accounting principles in effect from time to time in the United States of America.
“Global Note” has the meaning set forth in Section 3.1.
“Governmental Agency(ies)” means, individually or collectively, any federal, state, county or local governmental department, commission, board, regulatory authority or agency (including, without limitation, each applicable Regulatory Agency) with jurisdiction over the Company or a Subsidiary of the Company.
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“Governmental Licenses” has the meaning set forth in Section 4.3.
“Hazardous Materials” means flammable explosives, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under the Hazardous Materials Laws and/or other applicable environmental laws, ordinances or regulations.
“Hazardous Materials Laws” mean any laws, regulations, permits, licenses or requirements pertaining to the protection, preservation, conservation or regulation of the environment which relates to real property, including: the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et seq.; the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (including the Superfund Amendments and Reauthorization Act of 1986), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; and all comparable state and local laws, laws of other jurisdictions or orders and regulations.
“Indebtedness” means: (i) all items arising from the borrowing of money that, according to GAAP as in effect from time to time, would be included in determining total liabilities as shown on the consolidated balance sheet of the Company; and (ii) all obligations secured by any lien on property owned by the Company or any Subsidiary whether or not such obligations shall have been assumed; provided, however, Indebtedness shall not include deposits or other indebtedness created, incurred or maintained in the ordinary course of the Company’s or the Bank’s business (including, without limitation, federal funds purchased, advances from any Federal Home Loan Bank, secured deposits of municipalities, letters of credit issued by the Company or the Bank and repurchase arrangements) and consistent with customary banking practices and applicable laws and regulations.
“Leases” means all leases, licenses or other documents providing for the use or occupancy of any portion of any Property, including all amendments, extensions, renewals, supplements, modifications, sublets and assignments thereof and all separate letters or separate agreements relating thereto.
“Material Adverse Effect” means any change, development, or effect that (i) is or would be reasonably likely to be material and adverse to the financial condition, results of operations or business of the Company and its Subsidiaries taken as a whole, or (ii) would materially impair the ability of the Company to perform its obligations under any of the Transaction Documents, or otherwise materially impede the consummation of the transactions contemplated hereby; provided, however, that “Material Adverse Effect” shall not be deemed to include the impact of (1) changes in banking and similar laws, rules or regulations of general applicability or interpretations thereof by Governmental Agencies, (2) changes, subsequent to the date hereof, in GAAP or regulatory accounting requirements applicable to financial institutions and their holding companies generally, (3) changes after the date of this Agreement in general economic or capital market conditions affecting financial institutions or their market prices generally and not specifically related to the Company, the Bank or the Purchasers, (4) the effects of the COVID-19 pandemic that do not disproportionately affect the operations or business of the Company in comparison to other banking institutions with similar operations, (5) direct effects of compliance with this Agreement on the operating performance of the Company, its Subsidiaries
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or the Purchasers, including expenses incurred by the Company, its Subsidiaries or the Purchasers in consummating the transactions contemplated by this Agreement, and (6) the effects of any action or omission taken by the Company with the prior written consent of the Purchasers, and vice versa, or as otherwise contemplated by this Agreement and the Subordinated Notes.
“Maturity Date” means May 20, 2032.
“Paying Agency Agreement” means the Issuing and Paying Agent Agreement, dated as of May 20, 2022, between the Company and the Paying Agent.
“Paying Agent” means U.S. Bank Trust Company, National Association, as paying agent and registrar under the Paying Agency Agreement, or any successor in accordance with the applicable provisions of the Paying Agency Agreement.
“Person” means an individual, a corporation (whether or not for profit), a partnership, a limited liability company, a joint venture, an association, a trust, an unincorporated organization, a government or any department or agency thereof (including a Governmental Agency) or any other entity or organization.
“Placement Agent” has the meaning set forth in the Recitals.
“Presentation” means the presentation captioned “Subordinated Notes Offering Presentation, May 9, 2022” made available to the Purchasers.
“Property” means any real property owned or leased by the Company or any Affiliate or Subsidiary of the Company.
“Purchaser” or “Purchasers” has the meaning set forth in the preamble hereto.
“QIB” means a “qualified institutional buyer” as defined in Rule 144A of the Securities Act.
“Regulation D” means Regulation D promulgated under the Securities Act.
“Regulatory Agency” means any federal or state agency charged with the supervision or regulation of depository institutions or holding companies of depository institutions, or engaged in the insurance of depository institution deposits, or any court, administrative agency or commission or other authority, body or agency having supervisory or regulatory authority with respect to the Company, the Bank or any of their Subsidiaries.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the Securities Act of 1933, as amended.
“Subordinated Note” means the Subordinated Note (or collectively, the “Subordinated Notes”) in the form attached as Exhibit A hereto, as amended, restated, supplemented or modified from time to time, and each Subordinated Note delivered in substitution or exchange for such Subordinated Note.
“Subordinated Note Amount” has the meaning set forth in the Recitals.
“Subsidiary” means with respect to any Person, any corporation or entity (other than a trust) in which a majority of the outstanding Equity Interest is directly or indirectly owned by such Person.
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“Tier 2 Capital” has the meaning given to the term “Tier 2 capital” in 12 C.F.R. Part 217, as amended, modified and supplemented and in effect from time to time or any replacement thereof.
“Transaction Documents” has the meaning set forth in Section 3.2.1.1.
1.2Interpretations. The foregoing definitions are equally applicable to both the singular and plural forms of the terms defined. The words “hereof”, “herein” and “hereunder” and words of like import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The word “including” when used in this Agreement without the phrase “without limitation,” shall mean “including, without limitation.” All references to time of day herein are references to Eastern Time unless otherwise specifically provided. All references to this Agreement, the Subordinated Notes, or the Paying Agency Agreement shall be deemed to be to such documents as amended, modified or restated from time to time. With respect to any reference in this Agreement to any defined term, (i) if such defined term refers to a Person, then it shall also mean all heirs, legal representatives and permitted successors and assigns of such Person, and (ii) if such defined term refers to a document, instrument or agreement, then it shall also include any amendment, replacement, extension or other modification thereof.
1.3Exhibits Incorporated. All Exhibits attached hereto are hereby incorporated into this Agreement.
2.SUBORDINATED DEBT.
1.1Certain Terms. Subject to the terms and conditions herein contained, the Company proposes to issue and sell to the Purchasers, severally and not jointly, Subordinated Notes in an aggregate principal amount equal to the aggregate of the Subordinated Note Amounts. The Purchasers, severally and not jointly, each agree to purchase the Subordinated Notes from the Company on the Closing Date in accordance with the terms of, and subject to the conditions and provisions set forth in, this Agreement and the Subordinated Notes. The Subordinated Note Amounts shall be disbursed in accordance with Section 3.1.
1.2The Closing. The closing of the sale and purchase of the Subordinated Notes (the “Closing”) shall occur at the offices of the Company at 10:00 a.m. (local time) on the Closing Date, or at such other place or time or on such other date as the parties hereto may agree, including remotely via the electronic or other exchange of documents and signature pages.
1.3Right of Offset. Each Purchaser hereby expressly waives any right of offset it may have against the Company or any of its Subsidiaries.
1.4Use of Proceeds. The Company shall use the net proceeds from the sale of Subordinated Notes for general corporate purposes.
3.DISBURSEMENT.
1.1Disbursement. On the Closing Date, assuming all of the terms and conditions set forth in Section 3.2 have been satisfied by the Purchasers and the Company, as applicable, and the Company has executed and delivered to each of the Purchasers this Agreement and any other related documents in form and substance reasonably satisfactory to the Purchasers, each Purchaser shall disburse to the Company in immediately available funds the Subordinated Note Amount set forth on each Purchaser’s respective signature page hereto in exchange for an electronic securities entitlement through the facilities of DTC in accordance with the Applicable Procedures in the Subordinated Note with a principal amount equal to such Subordinated Note
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Amount (the “Disbursement”). The Company will deliver (A) to the Paying Agent a global certificate representing the Subordinated Notes (the “Global Note”) registered in the name of Cede & Co., as nominee for DTC.
1.2Conditions Precedent to Disbursement.
1.1.1Conditions to the Purchasers’ Obligation. The obligation of each Purchaser to consummate the purchase of the Subordinated Notes to be purchased by such Purchaser at Closing and to effect the Disbursement is subject to delivery by or at the direction of the Company to such Purchaser each of the following (or written waiver by such Purchaser prior to the Closing of such delivery):
1.1.1.1Transaction Documents. This Agreement, the Paying Agency Agreement and the Global Note (collectively, the “Transaction Documents”), each duly authorized and executed by the Company.
1.1.1.2Authority Documents:
(a)A copy, certified by the Secretary of the Company, of the Articles of Incorporation of the Company;
(b)A Certificate of Good Standing of the Company issued by the Secretary of State of the State of Georgia;
(c)A copy, certified by the Secretary of the Company, of the Bylaws of the Company;
(d)A copy, certified by the Secretary of the Company, of the resolutions of the board of directors of the Company, and any committee thereof, authorizing the issuance of the Subordinated Notes and the execution, delivery and performance of the Transaction Documents;
(e)An incumbency certificate of the Secretary of the Company certifying the names of the officer or officers of the Company authorized to sign the Transaction Documents and the other documents provided for in this Agreement; and
(f)The opinion of Alston & Bird LLP, counsel to the Company, dated as of the Closing Date, substantially in the form set forth at Exhibit B attached hereto addressed to the Purchasers and the Placement Agent.
1.1.1.3Other Documents and Information. Such other certificates, affidavits, schedules, resolutions, notes and/or other documents which are provided for hereunder or as a Purchaser may reasonably request.
1.1.1.4Aggregate Investments. Prior to, or contemporaneously with the Closing, each Purchaser shall have actually subscribed for the Subordinated Note Amount set forth on such Purchaser’s signature page to this Agreement.
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1.1.2Conditions to the Company’s Obligation. With respect to a given Purchaser, the obligation of the Company to consummate the sale of the Subordinated Notes and to effect the Closing is subject to delivery by or at the direction of such Purchaser to the Company of this Agreement, duly authorized and executed by such Purchaser and the Company’s receipt of the Subordinated Note Amount set forth on such Purchaser’s respective signature page to this Agreement.
4.REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to each Purchaser as follows:
1.1Organization and Authority.
1.1.1Organization Matters of the Company and Its Subsidiaries.
1.1.1.1The Company is a duly organized corporation, is validly existing and in good standing under the laws of the State of Georgia and has all requisite corporate power and authority to conduct its business and activities as presently conducted, to own its properties, and to perform its obligations under the Transaction Documents. The Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect. The Company is duly registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.
1.1.1.2The Bank is the Company’s only banking subsidiary. The Bank has been duly organized and is validly existing and in good standing as a Georgia state banking corporation. Each other Subsidiary of the Company has been duly organized and is validly existing as a corporation or limited liability company in good standing under the laws of the jurisdiction of its organization or incorporation. Each Subsidiary of the Company has the power and authority to own, lease and operate its properties and to conduct its business and is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure to so qualify or to be in good standing would not result in a Material Adverse Effect. All of the issued and outstanding shares of capital stock of each Subsidiary of the Company have been duly authorized and validly issued, are fully paid and non-assessable and are owned by the Company, directly or through Subsidiaries of the Company, free and clear of any security interest, mortgage, pledge, lien, encumbrance or claim; none of the outstanding shares of capital stock of any Subsidiary of the Company were issued in violation of the preemptive or similar rights of any security holder of such Subsidiary or any other entity.
1.1.1.3The deposit accounts of the Bank are insured by the FDIC up to applicable limits. The Bank has not received any written notice or other information indicating that the Bank is not an “insured depository institution” as defined in 12 U.S.C. Section 1813, nor has any event occurred that could reasonably be expected to materially and adversely affect the status of the Bank as an FDIC-insured institution.
1.1.2Capital Stock and Related Matters. The Articles of Incorporation of the Company authorize the Company to issue 20,000,000 shares of common stock and 10,000,000 shares of preferred stock. As of March 31, 2022, 17,586,333 shares of the Company’s common stock and no shares of Company’s preferred stock were issued and outstanding. All of the outstanding capital stock of the Company has been duly authorized and validly issued and is
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fully paid and non-assessable. Other than pursuant to the Company’s equity incentive plans disclosed in the Company’s Reports and duly adopted by the Company’s board of directors, there are, as of the date hereof, no outstanding options, rights, warrants or other agreements or instruments obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of the Company or obligating the Company to grant, extend or enter into any such agreement or commitment to any Person other than the Company.
1.2No Impediment to Transactions.
1.1.1Transaction is Legal and Authorized. The issuance of the Subordinated Notes, the borrowing of the aggregate of the Subordinated Note Amount, the execution of the Transaction Documents and compliance by the Company with all of the provisions of the Transaction Documents are within the corporate and other powers of the Company.
1.1.2Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and, assuming due authorization, execution and delivery by the other parties hereto, constitutes the legal, valid and binding obligations of the Company, enforceable against the Company in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
1.1.3Subordinated Notes. The Subordinated Notes have been duly authorized by the Company and when duly executed, authenticated, issued and delivered by the Company to the Purchasers and paid for by the Purchasers in accordance with the terms of this Agreement, will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally or by general equitable principles.
1.1.4Exemption from Registration; No Disqualification Event. Neither the Company, nor any of its Subsidiaries or Affiliates, nor, to its knowledge, any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Subordinated Notes. Assuming the accuracy of the representations and warranties of each Purchaser set forth in this Agreement, the Subordinated Notes will be issued in a transaction exempt from the registration requirements of the Securities Act. No “bad actor” disqualifying event described in Rule 506(d)(1)(i)-(viii) of Regulation D (a “Disqualification Event”) is applicable to the Company or, to the Company’s knowledge, any Person described in Rule 506(d)(1) of Regulation D (each, a “Company Covered Person”). To the Company’s knowledge after reasonable inquiry, no Company Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e) of Regulation D.
1.1.5No Defaults or Restrictions. Neither the execution and delivery of the Transaction Documents by the Company nor compliance by the Company with their respective terms and conditions will (whether with or without the giving of notice or lapse of time or both) (i) violate, conflict with or result in a breach of, or constitute a default under: (1) the Articles of Incorporation or Bylaws of the Company; (2) any of the terms, obligations, covenants, conditions or provisions of any corporate restriction or of any contract, agreement, indenture, note, mortgage, deed of trust, pledge, bank loan or credit agreement, or any other agreement or instrument to which the Company or any of its Subsidiaries, as applicable, is now a party or by which it or any of its properties may be bound; (3) any judgment, order, writ, injunction, decree or demand of any court, arbitrator, grand jury, or Governmental Agency applicable to the Company or any of its Subsidiaries; or (4) any statute, rule or regulation applicable to the
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Company or any of its Subsidiaries, except, in the case of items (2), (3) or (4), for such violations, conflicts, breaches and defaults that would not, either singularly or in the aggregate, reasonably be expected to result in, a Material Adverse Effect, or (ii) result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any material property or asset of the Company. Neither the Company nor the Bank is in default in the performance, observance or fulfillment of any of the terms, obligations, covenants, conditions or provisions contained in any indenture or other agreement creating, evidencing or securing Indebtedness or pursuant to which any such Indebtedness is issued, or any other agreement or instrument to which the Company or the Bank, as applicable, is a party or by which the Company or the Bank, as applicable, or any of its properties may be bound, except, in each case, only such defaults that would not reasonably be expected to have, either singularly or in the aggregate, a Material Adverse Effect.
1.1.6Governmental Consent. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained by the Company that have not been obtained, and no registrations or declarations are required to be filed by the Company that have not been filed in connection with, or, in contemplation of, the execution and delivery of, and performance under, the Transaction Documents, except for applicable requirements, if any, of the Securities Act, the Exchange Act or state securities laws or “blue sky” laws of the various states and any applicable federal or state banking laws and regulations.
1.3Possession of Licenses and Permits. The Company and each of its Subsidiaries possesses such permits, licenses, approvals, consents and other authorizations (collectively, “Governmental Licenses”) issued by the appropriate Governmental Agencies necessary to conduct the business now operated by them except where the failure to possess such Governmental Licenses would not, singularly or in the aggregate, have a Material Adverse Effect. The Company and each of its Subsidiaries is in compliance with the terms and conditions of all such Governmental Licenses, except where the failure to so comply would not, individually or in the aggregate, have a Material Adverse Effect. All of the Governmental Licenses are valid and in full force and effect, except where the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries has received any written notice of proceedings relating to the revocation or modification of any such Governmental Licenses.
1.4Financial Condition.
1.1.1Company Financial Statements. The financial statements of the Company included in the Company’s Reports (including the related notes, where applicable), which have been made available to the Purchasers (i) have been prepared from, and are in accordance with, the books and records of the Company; (ii) fairly present in all material respects the results of operations, cash flows, changes in stockholders’ equity and financial position of the Company and its consolidated Subsidiaries, for the respective fiscal periods or as of the respective dates therein set forth (subject in the case of unaudited statements to recurring year-end audit adjustments normal in nature and amount), as applicable; (iii) complied as to form, as of their respective dates of filing in all material respects with applicable accounting and banking requirements as applicable, with respect thereto; and (iv) have been prepared in accordance with GAAP consistently applied during the periods involved, except, in each case, (x) as indicated in such statements or in the notes thereto, (y) for any statement therein or omission therefrom that was corrected, amended, or supplemented or otherwise disclosed or updated in a subsequent Company’s Report, and (z) to the extent that any unaudited interim financial statements do not contain the footnotes required by GAAP, and were or are subject to normal and recurring year-end adjustments, which were not or are not expected to be material in amount, either individually or in the aggregate. The books and records of the Company have
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been, and are being, maintained in all material respects in accordance with GAAP and any other applicable legal and accounting requirements. The Company does not have any material liability of any nature whatsoever (whether absolute, accrued, contingent or otherwise and whether due or to become due) required to be reflected on or reserved against in a balance sheet prepared in accordance with GAAP, except for those liabilities that are reflected or reserved against on the consolidated balance sheet of the Company contained in the Company’s Reports for the Company’s most recently completed quarterly or annual fiscal period, as applicable, and for liabilities incurred in the ordinary course of business consistent with past practice or in connection with this Agreement and the transactions contemplated hereby.
1.1.2Absence of Default. Since the end of the Company’s fiscal year ended December 31, 2021, no event has occurred which either of itself or with the lapse of time or the giving of notice or both, would give any creditor of the Company the right to accelerate the maturity of any material Indebtedness of the Company. The Company is not in default under any Lease, agreement or instrument, or any law, rule, regulation, order, writ, injunction, decree, determination or award, non-compliance with which could reasonably be expected to result in a Material Adverse Effect.
1.1.3Solvency. After giving effect to the consummation of the transactions contemplated by this Agreement, the Company has capital sufficient to carry on its business and transactions and is solvent and able to pay its debts as they mature. No transfer of property is being made and no Indebtedness is being incurred in connection with the transactions contemplated by this Agreement with the intent to hinder, delay or defraud either present or future creditors of the Company or any Subsidiary of the Company.
1.1.4Ownership of Property. The Company and each of its Subsidiaries has good and marketable title as to all real property owned by it and good title to, or right to use under valid and existing leases or licenses, all assets and properties used by the Company or any Subsidiary in the conduct of their respective businesses, whether such assets and properties are real or personal, tangible or intangible, including assets and property reflected in the most recent balance sheet contained in the Company’s Reports or acquired subsequent thereto (except to the extent that such assets and properties have been disposed of in the ordinary course of business, since the date of such balance sheet), subject to no encumbrances, liens, mortgages, security interests or pledges, except (i) those items which secure liabilities for public or statutory obligations or any discount with, borrowing from or other obligations to the Federal Home Loan Bank, inter-bank credit facilities, reverse repurchase agreements or any transaction by the Bank acting in a fiduciary capacity, (ii) statutory liens for amounts not yet delinquent or which are being contested in good faith and (iii) such as do not, individually or in the aggregate, materially and adversely affect the value of such property and do not materially and adversely interfere with the use made and proposed to be made of such property by the Company or such Subsidiary. The Company and each of its Subsidiaries, as lessee, has the right under valid and existing Leases of real and personal properties that are material to the Company or such Subsidiary, as applicable, in the conduct of its business to occupy or use all such properties as presently occupied and used by it. Such existing Leases and commitments to Lease constitute or will constitute operating Leases for both tax and financial accounting purposes except as otherwise disclosed in the Company’s Reports and the Lease expense and minimum rental commitments with respect to such Leases and Lease commitments are as disclosed in all material respects in the Company’s Reports.
1.5No Material Adverse Effect. Since the end of the Company’s fiscal year ended December 31, 2021, except as disclosed in the Presentation, there has been no Material Adverse Effect.
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1.6Legal Matters.
1.1.1Compliance with Law. The Company and each of its Subsidiaries (i) has complied with and (ii) to its knowledge, is not under investigation with respect to, and have not been threatened to be charged with or given any written notice of any unresolved material violation of any applicable statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any instrumentality or agency thereof, having jurisdiction over the conduct of its business or the ownership of its properties, except where any such failure to comply or violation would not reasonably be expected to have a Material Adverse Effect . The Company and each of its Subsidiaries is in compliance with, and at all times since December 31, 2021, has been in compliance with, (x) all statutes, rules, regulations, orders and restrictions of any domestic or foreign government, or any Governmental Agency applicable to it, and (y) its own privacy policies and written commitments to customers, consumers and employees, concerning data protection, the privacy and security of personal data, and the nonpublic personal information of their customers, consumers and employees, in each case except where any such failure to comply would not result in a Material Adverse Effect. At no time during the two years prior to the date hereof has the Company or any Subsidiary of the Company received any written notice asserting any violations of any of the foregoing that remains unresolved.
1.1.2Regulatory Enforcement Actions. The Company and each of its Subsidiaries is in compliance in all material respects with all laws administered by and regulations of any Governmental Agency applicable to them, except where the failure to comply would not have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries, nor any of their officers or directors, is now operating under any restrictions, written agreements, memoranda, commitment letter, supervisory letter or similar regulatory correspondence, or other commitments (other than restrictions of general application) imposed by any Governmental Agency, nor are, to the Company’s knowledge, (a) any such restrictions threatened, (b) any agreements, memoranda or commitments being sought by any Governmental Agency, or (c) any legal or regulatory violations previously identified by, or penalties or other remedial action previously imposed by, any Governmental Agency remains unresolved.
1.1.3Pending Litigation. There are no actions, suits, proceedings or written agreements pending, or, to the Company’s knowledge, threatened or proposed, against the Company or any of its Subsidiaries at law or in equity before or by any Governmental Agency, that would reasonably be expected to have a Material Adverse Effect or materially and adversely affect the issuance or payment of the Subordinated Notes; the aggregate of all pending legal or governmental proceedings to which the Company or any of its Subsidiaries is a party or of which any of their respective properties or assets is the subject, including ordinary routine litigation incidental to the business, could not reasonably be expected to result in a Material Adverse Effect .
1.1.4Environmental. No Property is or, to the Company’s knowledge, has been a site for the use, generation, manufacture, storage, treatment, release, threatened release, discharge, disposal, transportation or presence of any Hazardous Materials and neither the Company nor any of its Subsidiaries has engaged in such activities. There are no claims or actions pending or, to the Company’s knowledge, threatened against the Company or any of its Subsidiaries by any Governmental Agency or by any other Person relating to any Hazardous Materials or pursuant to any Hazardous Materials Law, except for such actions or claims that would not reasonably be expected to have a Material Adverse Effect.
1.1.5Brokerage Commissions. Except for commissions paid or payable to the Placement Agent, neither the Company nor any Affiliate of the Company is obligated to pay any brokerage commission or finder’s fee to any Person in connection with the transactions contemplated by this Agreement.
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1.1.6Investment Company Act. Neither the Company nor any of its Subsidiaries is an “investment company” or a company “controlled” by an “investment company,” within the meaning of the Investment Company Act of 1940, as amended .
1.7No Misstatement. None of the representations, warranties, covenants and agreements made by the Company in this Agreement or in any certificate delivered to the Purchasers by or on behalf of the Company pursuant to this Agreement, contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein not misleading in light of the circumstances when made or furnished to the Purchasers, as of the date of this Agreement, except for any statement herein or omission therefore which was corrected, amended, or supplemented or otherwise disclosed or updated in a subsequent exhibit, schedule or document prior to the date of this Agreement.
1.8Internal Accounting Controls. The Company and each of its Subsidiaries has established and maintains a system of internal control over financial reporting that pertains to the maintenance of records that accurately and fairly reflect the transactions and dispositions of the Company’s assets (on a consolidated basis), provides reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that the Company’s and each of its Subsidiaries’ receipts and expenditures are being made only in accordance with authorizations of their respective management and board of directors, and provides reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets of the Company on a consolidated basis that could have a Material Adverse Effect. The Company believes that such system of internal control over financial reporting is effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. Since the conclusion of the Company’s last completed fiscal year there has not been and there currently is not to the knowledge of the Company (i) any significant deficiency or material weakness in the design or operation of its internal control over financial reporting which is reasonably likely to adversely affect its ability to record, process, summarize and report financial information that would result in a material misstatement of the Company’s financial statements, or (ii) any fraud that involves management or other employees who have a significant role in the Company’s or the Bank’s internal control over financial reporting. The Company (A) has implemented and maintains disclosure controls and procedures that it believes are reasonably designed and maintained to ensure that material information relating to the Company is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within the Company and (B) has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s outside auditors and the audit committee of the Company’s board of directors any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the Company’s internal controls over financial reporting and of which the Company has knowledge. Such disclosure controls and procedures are effective for the purposes for which they were established.
1.9Tax Matters. The Company and each of its Subsidiaries has (i) filed all material foreign, U.S. federal, state and local tax returns, information returns and similar reports that are required to be filed by it prior to the date hereof, or requests for extensions to file such returns have been timely filed, and all such tax returns were true, correct and complete in all material respects, and (ii) paid all material taxes required to be paid by it and any other material assessment, fine or penalty levied against it other than taxes (x) currently payable without penalty or interest, or (y) being contested in good faith by appropriate proceedings.
1.10Representations and Warranties Generally. The representations and warranties of the Company set forth in this Agreement that do not contain a “Material Adverse Effect” qualification or other express materiality or similar qualification shall be true and correct
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in all material respects as of the date hereof and as of the Closing Date (except for any such representation or warranty that is made only as of a specific date, in which case as of such specific date). The representations and warranties of the Company set forth in this Agreement that contain a “Material Adverse Effect” qualification or any other express materiality or similar qualification shall be true and correct as of the date hereof and as of the Closing Date (except for any such representation or warranty that is made only as of a specific date, in which case as of such specific date).
5.GENERAL COVENANTS, CONDITIONS AND AGREEMENTS.
The Company hereby further covenants and agrees with each Purchaser as follows:
1.1Compliance with Transaction Documents. The Company shall comply with, observe and timely perform, in all material respects, each and every one of the covenants, agreements and obligations of the Company under the Transaction Documents.
1.2Affiliate Transactions. The Company shall not itself, nor shall it cause, permit or allow any of its Subsidiaries to enter into any material transaction, including, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate of the Company except in the ordinary course of business and pursuant to the reasonable requirements of the Company’s or such Affiliate’s business or upon terms consistent with applicable laws and regulations and reasonably found by the appropriate board(s) of directors to be fair and reasonable and no less favorable to the Company or such Affiliate than would be obtained in a comparable arm’s length transaction with a Person not an Affiliate.
1.3Compliance with Laws.
1.1.1Generally. The Company shall comply and cause each of its Subsidiaries to comply in all material respects with all applicable statutes, rules, regulations, orders and restrictions in respect of the conduct of its business and the leasing or ownership of its Properties, except, in each case, where such noncompliance would not reasonably be expected to have a Material Adverse Effect.
1.1.2Regulated Activities. The Company shall not itself, nor shall it cause, permit or allow any of its Subsidiaries to (i) engage in any business or activity not permitted by all applicable laws and regulations, except where such business or activity would not reasonably be expected to have a Material Adverse Effect, or (ii) make any loan or advance secured by the capital stock of another bank or depository institution, or acquire the capital stock, assets or obligations of or any interest in another bank or depository institution, in each case other than in accordance with applicable laws and regulations and safe and sound banking practices.
1.1.3Taxes. The Company shall and shall cause the Bank to promptly pay and discharge all material taxes, assessments and other governmental charges imposed upon the Company or any of its Subsidiaries or upon the income, profits, or property of the Company or any of its Subsidiaries and all claims for labor, material or supplies which, if unpaid, might by law become a lien or charge upon the property of the Company or any of its Subsidiaries. Notwithstanding the foregoing, none of the Company or any of its Subsidiaries shall be required to pay any such tax, assessment, charge or claim, so long as the validity thereof shall be contested in good faith by appropriate proceedings, and appropriate reserves therefor shall be maintained on the books of the Company or its Subsidiaries, as applicable.
1.1.4Corporate Existence. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect: (i) the corporate existence of the Company; (ii) the existence (corporate or other) of each Subsidiary; and (iii) the rights
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(constituent governing documents and statutory), licenses and franchises of the Company and each of its Subsidiaries; provided, however, that the Company will not be required to preserve the existence (corporate or other) of any of its Subsidiaries or any such right, license or franchise of the Company or any of its Subsidiaries if the board of directors of the Company determines that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries taken as a whole and that the loss thereof will not be disadvantageous in any material respect to the Noteholders; provided further, that the Company may consummate a merger in which (i) the Company is the surviving entity in the merger, or (ii) if the Company is not the surviving entity, the requirements of Section 9(b) of the Subordinated Note are satisfied.
1.1.5Tier 2 Capital. If all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, the Company will promptly notify each Noteholder (as defined in the Subordinated Note), and thereafter, if requested by the Company, the Company and each Noteholder will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained in this Agreement shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as described in the Subordinated Notes.
1.4Absence of Control. It is the intent of the parties to this Agreement that in no event shall the Purchasers, by reason of any of the Transaction Documents, be deemed to control, directly or indirectly, the Company, and the Purchasers shall not exercise, or be deemed to exercise, directly or indirectly, a controlling influence over the management or policies of the Company.
1.5Bloomberg. The Company shall use commercially reasonable efforts to cause the Subordinated Notes to be quoted on Bloomberg.
1.6Rule 144A Information. While any Subordinated Notes remain “restricted securities” within the meaning of the Securities Act, the Company will make available, upon the request of any Purchaser or subsequent holder of any Subordinated Notes the information specified in Rule 144A(d)(4) under the Securities Act, unless the Company is then subject to Section 13 or 15(d) of the Exchange Act.
1.7NRSRO Rating. The Company will use commercially reasonable efforts to maintain a rating by a nationally recognized statistical rating organization while any Subordinated Notes remain outstanding.
1.8Redemption. Any redemption made pursuant to the terms of the Subordinated Note shall be made on a pro rata basis, and, for purposes of a redemption processed through DTC, in accordance with its rules and procedures, as a “Pro Rata Pass-Through Distribution of Principal.”
6.REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS.
Each Purchaser hereby represents and warrants to the Company, and covenants with the Company, in each case severally and not jointly, as follows:
1.1Legal Power and Authority. It has all necessary power and authority to execute, deliver and perform its obligations under this Agreement and to consummate the transactions
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contemplated hereby. It is an entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization.
1.2Authorization and Execution. The execution, delivery and performance of this Agreement has been duly authorized by all necessary action on the part of such Purchaser, and assuming due authorization, execution and delivery by the other parties hereto, this Agreement is a legal, valid and binding obligation of such Purchaser, enforceable against such Purchaser in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting creditors’ rights generally or by general equitable principles.
1.3No Conflicts. Neither the execution, delivery or performance of the Transaction Documents nor the consummation of any of the transactions contemplated thereby will conflict with, violate, constitute a breach of or a default (whether with or without the giving of notice or lapse of time or both) under (i) its organizational documents, (ii) any agreement to which it is party, (iii) any law applicable to it or (iv) any order, writ, judgment, injunction, decree, determination or award binding upon or affecting it.
1.4Purchase for Investment. It is purchasing the Subordinated Note for its own account and not with a view to distribution and with no present intention of reselling, distributing or otherwise disposing of the same. It has no present or contemplated agreement, undertaking, arrangement, obligation, Indebtedness or commitment providing for, or which is likely to compel, a disposition of the Subordinated Notes in any manner.
1.5QIB. It is and will be on the Closing Date a QIB.
1.6Financial and Business Sophistication. It has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Subordinated Notes. It has relied solely upon its own knowledge of, and/or the advice of its own legal, financial or other advisors with regard to, the legal, financial, tax and other considerations involved in deciding to invest in the Subordinated Notes.
1.7Ability to Bear Economic Risk of Investment. It recognizes that an investment in the Subordinated Notes involves substantial risk. It has the ability to bear the economic risk of the prospective investment in the Subordinated Notes, including the ability to hold the Subordinated Notes indefinitely, and further including the ability to bear a complete loss of all of its investment in the Company.
1.8Information. It acknowledges that: (i) it is not being provided with the disclosures that would be required if the offer and sale of the Subordinated Notes were registered under the Securities Act, nor is it being provided with any offering circular, private placement memorandum or prospectus prepared in connection with the offer and sale of the Subordinated Notes; (ii) it has conducted its own examination of the Company and the terms of the Subordinated Notes to the extent it deems necessary to make its decision to invest in the Subordinated Notes; (iii) it has availed itself of publicly available financial and other information concerning the Company to the extent it deems necessary to make its decision to purchase the Subordinated Notes (including meeting with representatives of the Company); and (iv) it has not received nor relied on any form of general solicitation or general advertising (within the meaning of Regulation D) from the Company or the Placement Agent in connection with the offer and sale of the Subordinated Notes. It has reviewed the information set forth in the Presentation, the Company’s Reports, the exhibits and schedules thereto and hereto and other information furnished by the Company in connection with the transactions contemplated by this Agreement.
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1.9Access to Information. It acknowledges that it and its advisors have been furnished with all materials relating to the business, finances and operations of the Company that have been requested by it or its advisors, and have been given the opportunity to ask questions of, and to receive answers from, persons acting on behalf of the Company concerning terms and conditions of the transactions contemplated by this Agreement, in order to make an informed and voluntary decision to enter into this Agreement.
1.10Investment Decision. It has made its own investment decision based upon its own judgment, due diligence and advice from such advisors as it has deemed necessary and not upon any view expressed by any other Person or entity, including the Company or the Placement Agent. Neither such inquiries nor any other due diligence investigations conducted by it or its advisors or representatives, if any, shall modify, amend or affect its right to rely on the Company’s representations and warranties contained herein. It is not relying upon, and has not relied upon, any advice, statement, representation or warranty made by any Person by or on behalf of the Company, including, without limitation, the Placement Agent, except for the express statements, representations and warranties of the Company made or contained in this Agreement. Furthermore, it acknowledges that (i) the Placement Agent has not performed any due diligence review on behalf of it and (ii) nothing in this Agreement or any other materials presented by or on behalf of the Company to it in connection with the purchase of the Subordinated Notes constitutes legal, tax or investment advice.
1.11Private Placement; No Registration; Restricted Legends. It understands and acknowledges that the Subordinated Notes are characterized as “restricted securities” under the Securities Act and are being sold by the Company without registration under the Securities Act in reliance on the exemption from federal and state registration set forth in, respectively, Rule 506(b) of Regulation D promulgated under Section 4(a)(2) of the Securities Act and Section 18 of the Securities Act, or any state securities laws, and accordingly, may be resold, pledged or otherwise transferred only in compliance with the registration requirements of federal and state securities laws or if exemptions from the Securities Act and applicable state securities laws are available to it. Further, while any Subordinated Notes remain in the restricted holding period pursuant to Rule 144 under the Securities Act, it understands and acknowledges that any resale of such Subordinated Notes will be limited to a QIB under Rule 144A under the Securities Act. It is not subscribing for the Subordinated Notes as a result of or subsequent to any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented at any seminar or meeting. It further acknowledges and agrees that all certificates or other instruments representing the Subordinated Notes will bear the restrictive legend set forth in the form of Subordinated Note. It further acknowledges its primary responsibilities under the Securities Act and, accordingly, will not sell or otherwise transfer the Subordinated Notes or any interest therein without complying with the requirements of the Securities Act and the rules and regulations promulgated thereunder and the requirements set forth in this Agreement. Neither the Placement Agent nor the Company has made or is making any representation, warranty or covenant, express or implied, as to the availability of any exemption from registration under the Securities Act or any applicable state securities laws for the resale, pledge or other transfer of the Subordinated Notes, or that the Subordinated Notes purchased by it will ever be able to be lawfully resold, pledged or otherwise transferred.
1.12Placement Agent. It will purchase the Subordinated Note(s) directly from the Company and not from the Placement Agent, is not relying on the Placement Agent in any manner with respect to its decision to purchase the Subordinated Note(s) (including but not limited to information provided by the Placement Agent in the Presentation), and understands that neither the Placement Agent nor any other broker or dealer has any obligation to make a market in the Subordinated Notes.
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1.13Tier 2 Capital. If the Company provides notice as contemplated in Section 5.3.5 that all or any portion of the Subordinated Notes ceases to be deemed to be Tier 2 Capital, other than due to the limitation imposed on the capital treatment of subordinated debt during the five (5) years immediately preceding the Maturity Date of the Subordinated Notes, and if requested by the Company, the Company and the Noteholders (as defined in the Subordinated Note) will work together in good faith to execute and deliver all agreements as reasonably necessary in order to restructure the applicable portions of the obligations evidenced by the Subordinated Notes to qualify as Tier 2 Capital; provided, however, that nothing contained in this Agreement shall limit the Company’s right to redeem the Subordinated Notes upon the occurrence of a Tier 2 Capital Event as described in the Subordinated Notes.
1.14Accuracy of Representations. It understands that each of the Placement Agent and the Company are relying and will rely upon the truth and accuracy of the foregoing representations, acknowledgements and agreements in connection with the transactions contemplated by this Agreement, and agrees that if any of the representations or acknowledgements made by the Purchaser are no longer accurate as of the Closing Date, or if any of the agreements made by the Purchasers are breached on or prior to the Closing Date, the Purchaser shall promptly notify the Placement Agent and the Company.
1.15Representations and Warranties Generally. The representations and warranties of the Purchaser set forth in this Agreement shall be true and correct as of the date hereof and will be true and correct as of the Closing Date (except for any such representation or warranty that is made only as of a specific date, in which case as of such specific date). Any certificate signed by a duly authorized representative of the Purchaser and delivered to the Company or to counsel for the Company shall be deemed to be a representation and warranty by the Purchaser to the Company as to the matters set forth therein.
7.MISCELLANEOUS.
1.1Prohibition on Assignment by the Company. Except as described in Section 9(b) (Merger or Sale of Assets) of the Subordinated Notes, the Company may not assign, transfer or delegate any of its rights or obligations under this Agreement or the Subordinated Notes without the prior written consent of all the Noteholders (as defined in the Subordinated Note). In addition, in accordance with the terms of the Subordinated Notes, any transfer of such Subordinated Notes by the Noteholders must be made in accordance with the Assignment Form attached thereto and the requirements and restrictions thereof.
1.2Time of the Essence. Time is of the essence for this Agreement.
1.3Waiver or Amendment. No waiver or amendment of any term, provision, condition, covenant or agreement herein shall be effective unless in writing and signed by the parties hereto. Notwithstanding the foregoing, the Company may amend or supplement the Subordinated Notes without the consent of the holders of the Subordinated Notes to cure any ambiguity, defect or inconsistency or to provide for uncertificated Subordinated Notes in addition to or in place of certificated Subordinated Notes, or to make any change that does not adversely affect the rights of any holder of any of the Subordinated Notes, provided that the Company notifies all of the holders of the Subordinated Notes of any such proposed amendment or supplement at least ten (10) days prior to the effectiveness thereof. Failure on the part of the Purchasers to complain of any acts or failure to act or to declare an Event of Default, irrespective of how long such failure continues, shall not constitute a waiver by the Purchasers of their rights hereunder or impair any rights, powers or remedies on account of any breach or default by the Company.
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1.4Severability. Any provision of this Agreement which is unenforceable or invalid or contrary to law, or the inclusion of which would adversely affect the validity, legality or enforcement of this Agreement, shall be of no effect and, in such case, all the remaining terms and provisions of this Agreement shall subsist and be fully effective according to the tenor of this Agreement the same as though any such invalid portion had never been included herein. Notwithstanding any of the foregoing to the contrary, if any provisions of this Agreement or the application thereof are held invalid or unenforceable only as to particular Persons or situations, the remainder of this Agreement, and the application of such provision to Persons or situations other than those to which it shall have been held invalid or unenforceable, shall not be affected thereby, but shall continue valid and enforceable to the fullest extent permitted by law.
1.5Notices. Any notice which any party hereto may be required or may desire to give hereunder shall be deemed to have been given if in writing and if delivered personally, or if mailed, postage prepaid, by United States registered or certified mail, return receipt requested, or if delivered by a responsible overnight commercial courier promising next Business Day delivery, addressed:
if to the Company: | Colony Bankcorp, Inc. 115 South Grant Street Fitzgerald, Georgia 31750 Attention: T. Heath Fountain, President & CEO | ||||
with a copy to: | Alston & Bird LLP One Atlantic Center 1201 West Peachtree Street Atlanta, Georgia 30309 Attention: Mark C. Kanaly David S. Park | ||||
if to the Purchasers: | To the address indicated on such Purchaser’s signature page. | ||||
or to such other address or addresses as the party to be given notice may have furnished in writing to the party seeking or desiring to give notice, as a place for the giving of notice; provided that no change in address shall be effective until five (5) Business Days after being given to the other party in the manner provided for above. Any notice given in accordance with the foregoing shall be deemed given when delivered personally or, if mailed, three (3) Business Days after it shall have been deposited in the United States mail as aforesaid or, if sent by overnight courier, the Business Day following the date of delivery to such courier (provided next Business Day delivery was requested).
1.6Successors and Assigns. This Agreement shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns; except that, (i) unless a Purchaser consents in writing, no assignment made by the Company in violation of this Agreement shall be effective or confer any rights on any purported assignee of the Company and (ii) unless such assignment complies with the Assignment Form attached to the Subordinated Notes, no assignment made by a Purchaser shall be effective or confer any rights on any purported assignee of Purchaser. The term “successors and assigns” will not include a purchaser of any of the Subordinated Notes from any Purchaser merely because of such purchase but shall include a purchaser of any of the Subordinated Notes pursuant to an assignment substantially complying with the Assignment Form attached to the Subordinated Notes.
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1.7No Joint Venture. Nothing contained herein or in any document executed pursuant hereto and no action or inaction whatsoever on the part of a Purchaser, shall be deemed to make a Purchaser a partner or joint venturer with the Company.
1.8Documentation. All documents and other matters required by any of the provisions of this Agreement to be submitted or furnished to a Purchaser shall be in form and substance satisfactory to such Purchaser.
1.9Entire Agreement. This Agreement and the Subordinated Notes along with any exhibits thereto and any nondisclosure agreements between the Purchaser and the Company, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and may not be modified or amended in any manner other than by supplemental written agreement executed by the parties hereto. No party, in entering into this Agreement, has relied upon any representation, warranty, covenant, condition or other term that is not set forth in this Agreement or in the Subordinated Notes.
1.10Choice of Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without giving effect to its laws or principles of conflict of laws. Nothing herein shall be deemed to limit any rights, powers or privileges which a Purchaser may have pursuant to any law of the United States of America or any rule, regulation or order of any department or agency thereof and nothing herein shall be deemed to make unlawful any transaction or conduct by a Purchaser which is lawful pursuant to, or which is permitted by, any of the foregoing.
1.11No Third Party Beneficiary. This Agreement is made for the sole benefit of the Company and the Purchasers, and no other Person shall be deemed to have any privity of contract hereunder nor any right to rely hereon to any extent or for any purpose whatsoever, nor shall any other Person have any right of action of any kind hereon or be deemed to be a third party beneficiary hereunder; provided, that the Placement Agent may rely on the representations and warranties contained herein to the same extent as if it were a party to this Agreement.
1.12Legal Tender of United States. All payments hereunder shall be made in coin or currency which at the time of payment is legal tender in the United States of America for public and private debts.
1.13Captions; Counterparts. Captions contained in this Agreement in no way define, limit or extend the scope or intent of their respective provisions. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. In the event that any signature is delivered by facsimile transmission, or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.
1.14Knowledge; Discretion. All references herein to a Purchaser’s or the Company’s knowledge shall be deemed to mean the knowledge of such party based on the actual knowledge of such party’s Chief Executive Officer and Chief Financial Officer or such other persons holding equivalent offices. Unless specified to the contrary herein, all references herein to an exercise of discretion or judgment by a Purchaser, to the making of a determination or designation by a Purchaser, to the application of a Purchaser’s discretion or opinion, to the granting or withholding of a Purchaser’s consent or approval, to the consideration of whether a matter or thing is satisfactory or acceptable to a Purchaser, or otherwise involving the decision
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making of a Purchaser, shall be deemed to mean that such Purchaser shall decide using the reasonable discretion or judgment of a prudent lender.
1.15Waiver of Right to Jury Trial. TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THAT THEY MAY HAVE TO A TRIAL BY JURY IN ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS, OR ANY OTHER STATEMENTS OR ACTIONS OF THE COMPANY, THE PLACEMENT AGENT, THE PAYING AGENT, THE CALCULATION AGENT OR THE PURCHASERS. THE PARTIES HERETO ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL SELECTED OF THEIR OWN FREE WILL. THE PARTIES HERETO FURTHER ACKNOWLEDGE THAT (I) THEY HAVE READ AND UNDERSTAND THE MEANING AND RAMIFICATIONS OF THIS WAIVER, (II) THIS WAIVER HAS BEEN REVIEWED BY THE PARTIES HERETO AND THEIR COUNSEL AND IS A MATERIAL INDUCEMENT FOR ENTRY INTO THIS AGREEMENT AND (III) THIS WAIVER SHALL BE EFFECTIVE AS TO EACH OF SUCH TRANSACTION DOCUMENTS AS IF FULLY INCORPORATED THEREIN.
1.16Expenses. Except as otherwise provided in this Agreement, each of the parties will bear and pay all costs and expenses incurred by it or on its behalf in connection with the transactions contemplated by this Agreement.
1.17Survival. Each of the representations and warranties set forth in this Agreement shall survive the Closing for a period of one year after the date hereof. Except as otherwise provided herein, all covenants and agreements contained herein shall survive until, by their respective terms, they are no longer operative, other than those which by their terms are to be performed in whole or in part prior to or on the Closing Date, which shall terminate as of the Closing Date.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the Company has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
COMPANY: COLONY BANKCORP, INC. By: Name: T. Heath Fountain Title: President and Chief Executive Officer | |||||
[Company Signature Page to Subordinated Note Purchase Agreement]
IN WITNESS WHEREOF, the Purchaser has caused this Subordinated Note Purchase Agreement to be executed by its duly authorized representative as of the date first above written.
PURCHASER: By: Name: Title: | |||||
Address of Purchaser: | |||||
Principal Amount of Purchased Subordinated Note: $ | |||||
[Purchaser Signature Page to Subordinated Note Purchase Agreement]
EXHIBIT A
FORM OF SUBORDINATED NOTE
EXHIBIT B
OPINION OF COUNSEL
1. Based solely on Certificates of Good Standing issued by the Secretary of State of the State or Georgia and other certificates provided to us by the Company, each of the Company and the Bank (i) has been incorporated and is validly existing under the laws of the State of Georgia and (ii) is duly qualified or licensed to do business and is in good standing as a foreign corporation authorized to do business in each jurisdiction in which the nature of such businesses or the ownership or leasing of such properties requires such qualification, except where the failure to be so qualified would not, individually or in the aggregate, have a Material Adverse Effect.
2.The Company is a registered financial holding company under the Bank Holding Company Act of 1956, as amended.
3.The Bank is an “insured depository institution” under Section 3(c)(2) of the Federal Deposit Insurance Act, as amended.
4. The Company has all requisite corporate power and authority to carry on its business and to own, lease and operate its properties and assets as described in the Company’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission on March 18, 2022.
5. The Company has all necessary corporate power and authority to execute, deliver and perform its obligations under the Transaction Documents to which it is a party and to consummate the transactions contemplated by the Transaction Documents.
6. The Agreement has been duly and validly authorized, executed and delivered by the Company. The Agreement constitutes a legal valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.
7. The Subordinated Notes have been duly and validly authorized by the Company and, when issued by the Company and delivered to and paid for by the applicable Purchasers in accordance with the terms of the Agreement and the Subordinated Notes, will have been duly executed, authenticated, issued and delivered and will constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, except that the enforcement thereof may be subject to (i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent conveyance, fraudulent transfer or other similar laws now or hereafter in effect relating to or affecting creditors’ rights generally and (ii) general principles of equity (whether applied by a court of law or equity) and the discretion of the court before which any proceeding therefor may be brought.
8. Assuming the accuracy of the representations and warranties of each of the Purchasers set forth in the Agreement, the Subordinated Notes to be issued and sold by the Company to the Purchasers pursuant to the Agreement will be issued in a transaction exempt from the registration requirements of the Securities Act.
9. The execution and delivery by the Company of the Agreement does not, and the performance by it of its obligations thereunder will not, (i) to such counsel’s knowledge, result in a violation by the Company of any Georgia statute or any rule or regulation thereunder, (ii) result in a violation of the Company’s Articles of Incorporation or Bylaws, or (iii) to such counsel’s knowledge, result in a violation of any court order or judgment of any agency or court of the State of Georgia having jurisdiction over the Company or the Bank.
* The opinion to be subject to customary limitations, qualifications and carveouts.
For additional information, contact:
Andy Borrmann
Chief Financial Officer
678.734.3505
COLONY BANKCORP COMPLETES $40 MILLION SUBORDINATED NOTE OFFERING
FITZGERALD, GA. (May 23, 2022) – Colony Bankcorp, Inc. (NASDAQ: CBAN) (“Colony” or the “Company”), the parent company of Colony Bank, announced today the completion of its private placement of $40 million in fixed-to-floating rate subordinated notes due 2032 (the “Notes”) on May 20, 2022. The Notes will bear a fixed rate of 5.25% for the first five years and will reset quarterly thereafter to then current three-month Secured Overnight Financing Rate, as published by the Federal Reserve Bank of New York, plus 265 basis points for the five year floating term. The Company is entitled to redeem the Notes, in whole or in part, on any interest payment date on or after May 20, 2027, or at any time, in whole but not in part, upon certain other specified events.
The Notes are intended to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company intends to use the net proceeds for general corporate purposes including supporting ongoing growth.
Commenting on the announcement, Heath Fountain, President and Chief Executive Officer, said, “We were pleased with the market interest in this offering and we believe this capital provides both offensive and defensive support, depending on future needs of the Company, in a cost-effective manner. We also view this raise as an appropriate addition to the capital stack after our common equity raise in February. We now have the capital structure to efficiently address the tactical and strategic opportunities in front of us.”
Performance Trust Capital Partners, LLC served as the sole placement agent for the offering. Alston & Bird LLP served as legal counsel to the Company and Fenimore Kay Harrison LLP served as legal counsel to the placement agent.
This press release is for informational purposes only and shall not constitute an offer to sell, a solicitation of an offer to sell, or the solicitation of an offer to buy the Notes, nor shall there be any sale in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.
The indebtedness evidenced by the Notes is not a deposit and is not insured by the Federal Deposit Insurance Corporation or any other government agency or fund.
About Colony Bankcorp
Colony Bankcorp, Inc. is the bank holding company for Colony Bank. Founded in 1975 and headquartered in Fitzgerald, Georgia, Colony operates 39 locations throughout Georgia. At Colony Bank, we offer a wide range of banking services including personal banking, business banking, mortgage solutions, government guaranteed lending solutions, and more. We have expanded our services to also include consumer insurance products, such as automotive, homeowners, and other insurance needs for our community. Colony’s common stock is traded on the NASDAQ Global Market under the symbol “CBAN.” For more information, please visit www.colony.bank. You can also follow the Company on social media.
Forward-Looking Statements
Certain statements contained in this press release that are not statements of historical fact constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Examples of forward-looking statements include, but are not limited to: (i) projections and/or expectations of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statement of plans and objectives of Colony Bankcorp, Inc. or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; (iv)
statements regarding growth strategy, capital management, liquidity and funding, and future profitability; (v) statements regarding the effects of the COVID-19 pandemic and related variants on the Company’s business and financial results and conditions; and (vi) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.
Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: the continued impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; the Company’s ability to implement its various strategic and growth initiatives; competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; interest rate risk; legislation or regulatory changes which adversely affect the ability of the consolidated Company to conduct business combinations or new operations; adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company’s participation in and execution of government programs related to the COVID-19 pandemic and related variants; higher inflation and its impacts; the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; risks related to the Company’s recently completed acquisitions, including that the anticipated benefits from the recently completed acquisitions are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions or other unexpected factors or events; the risks associated with the Company’s pursuit of future acquisitions; and general competitive, economic, political and market conditions or other unexpected factors or events. These and other factors, risks and uncertainties could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Many of these factors are beyond the Company’s ability to control or predict.
Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company’s management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company’s filings with the Securities and Exchange Commission, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors,” and in the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements.
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1 9 CONFIDENTIAL May 9, 2022 Subordinated Notes Offering Investor Presentation NASDAQ: CBAN
2 This confidential presentation (this “Presentation”) has been prepared solely for general informational purposes by Colony Bankcorp, Inc. (the “holding company”, and, together with its wholly owned subsidiary Colony Bank (the “Bank”), the “Company”, “we”, or “our”), and is being furnished solely for use on a confidential basis by a limited number of selected prospective qualified institutional buyers (as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”)) in considering participation in the proposed private offering (the “Offering”) of the holding company’s subordinated notes (the “Securities”). No representation or warranty as to the accuracy, completeness, or fairness of such information is being made by the Company or any other person, and neither the Company and its affiliates nor any other person shall have any liability for any information contained herein, or for any omissions from this Presentation or any other written or oral communications transmitted to the recipient by the Company or its affiliates or any other person in the course of the recipient’s evaluation of the Company or the Offering. This Presentation does not constitute an offer to sell, or a solicitation of an offer to purchase, the Securities nor shall there be any sale of such Securities in any state or jurisdiction in which such an offer or solicitation is not permitted or would be unlawful. Each investor must comply with all legal requirements in each jurisdiction in which it purchases, offers, or sells the Securities, and must obtain any consent, approval, or permission required by it in connection with the Securities or the Offering. The Securities have not been registered under the Securities Act or any state securities laws and may not be offered or sold absent registration or an exemption from registration under applicable federal and state securities laws. The Securities are not a deposit or bank account, and are not, and will not be, insured or guaranteed by the Federal Deposit Insurance Corporation (the “FDIC”) or any other federal or state government agency. Neither the Securities nor the investment in the Securities has been approved or disapproved by the Securities and Exchange Commission (the “SEC”), the FDIC, the Board of Governors of the Federal Reserve System, the Georgia Department of Banking and Finance or any other federal or state regulatory authority, nor has any authority passed upon or endorsed the merits of the Offering or the accuracy or adequacy of this Presentation. Any representation to the contrary is a criminal offense. The Company has authorized Performance Trust Capital Partners, LLC, to act as its sole placement agent in the Offering. The information contained herein is intended only as an outline that has been prepared to assist interested parties in making their own evaluations of the Company. It does not purport to be all-inclusive or to contain all of the information that a prospective participant may desire or require to form the basis of any investment decision. Each recipient of the information and data contained herein should perform its own independent investigation and analysis of the Offering, the creditworthiness of the Company, and the value of the Company. The information and data contained herein are not a substitute for a recipient’s independent evaluation and analysis. In making a decision to invest in the Securities, prospective participants must rely on their own examination of the Company, including the merits and risks involved. Prospective participants are urged to consult with their own legal, tax, investment, regulatory and accounting advisers with respect to the consequences of an investment in the Company. In the event that any portion of this Presentation is inconsistent with or contrary to any of the terms of the form of a note purchase agreement (the “purchase agreement”), the purchase agreement shall control. Except as otherwise indicated, this Presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that the information contained herein is correct as of any future date or that there has been no change in the affairs of the Company after the date hereof. You will be given the opportunity to ask questions of and receive answers from Company representatives concerning the Company’s business and the terms and conditions of the Offering, and the Company may provide you with additional relevant information that you may reasonably request to the extent the Company possesses such information or can obtain it without unreasonable effort or expense. Except for information provided in response to such requests, the Company has not authorized any other person to give you information that is not found in this Presentation. If such unauthorized information is obtained or provided, the Company cannot and does not assume responsibility for its accuracy, credibility, or validity. This Presentation may contain statistics and data that in some cases has been obtained or compiled from information made available by third-party service providers, including references to the Performance Trust PT ScoreTM developed by Performance Trust Capital Partners, LLC. The Company makes no representations or warranty, express or implied, with respect to the accuracy, reasonableness or completeness of such information. The Company is not providing you with any legal, business, tax or other advice regarding an investment in the Securities. You should consult with your own advisors as needed to assist you in making your investment decision and to advise you whether you are legally permitted to purchase the Securities. The Company reserves the right to withdraw or amend this Offering for any reason and to reject any purchase agreement in whole or in part. Notice to Recipients
3 This Presentation has been prepared by the Company solely for informational purposes based on information regarding our operations, as well as information from public sources. This Presentation is being furnished on a confidential basis to a limited number of qualified institutional buyers. The information in this Presentation is confidential and may not be reproduced or redistributed, passed on or divulged, directly or indirectly, in whole or in part, to any other person. The Company reserves the right to request the return or destruction of this Presentation at any time. Any offering of Securities may be made only by a purchase agreement and the information contained herein will be superseded in its entirety by such purchase agreement. This Presentation does not contain all of the information you should consider before investing in Securities and should not be construed as accounting, investment, legal, regulatory or tax advice. Each potential investor should review the purchase agreement, make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the Securities and should consult its own legal counsel and financial, accounting, regulatory and tax advisors to determine the consequences of such an investment in the Securities prior to making an investment decision and should not rely on any information set forth in this Presentation. The Securities will not be registered for public sale and will be subject to significant limitations on their liquidity. Only potential investors who can bear the risk of an unregistered illiquid investment should consider investment in the Securities described herein. Investment in the Securities involves a high degree of risk. The following factors, among others, could cause actual results to differ materially from forward-looking statements or the Company’s historical performance: (i) the Securities will be unsecured and subordinated to any future senior indebtedness; (ii) the Securities will not be insured or guaranteed by the FDIC, any other governmental agency or the Bank; (iii) the Securities will be structurally subordinated to the indebtedness and other liabilities of the Company, which means that creditors of the Company generally will be paid from the Company’s assets before holders of the Securities would have any claims to those assets; (iv) the Securities do not contain any limitations on our ability to incur additional indebtedness, grant or incur a lien on our assets or sell or otherwise dispose of assets; (v) payments on the Securities will depend on receipt of dividends and distributions from the Bank; (vi) we may not be able to generate sufficient cash to service all of our debt, including the Securities; (vii) regulatory guidelines may restrict our ability to pay the principal of, and accrued and unpaid interest on, the Securities, regardless of whether we are the subject of any insolvency proceeding; and (viii) holders of the Securities will have limited rights, including limited rights of acceleration, if there is an event of default. This Presentation contains "forward-looking statements“ within the meaning of, and subject to the protections of, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act and Section 21E of the Exchange Act. Examples of forward-looking statements include, but are not limited to: (i) projections and/or expectations of revenues, income or loss, earnings or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statement of plans and objectives of the Company or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; (iv) statements regarding growth strategy, capital management, liquidity and funding and future profitability; (v) statements regarding the effects of the COVID-19 pandemic and related variants on the Company’s business and financial results and conditions; and (vi) statements of assumptions underlying such statements. Words such as “may,” “believe,” “anticipate,” “expect,” “intend,” “target,” “potential,” “opportunity,” “could,” “project,” “seek,” “should,” “will,” “would,” “plan,” “estimate,” “predict” and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties. Factors that might cause such differences include, but are not limited to: the impact of the COVID-19 pandemic and related variants on the Company’s assets, business, cash flows, financial condition, liquidity, prospects and results of operations; the Company’s ability to implement its various strategic and growth initiatives; competitive pressures among financial institutions increasing significantly; economic conditions, either nationally or locally, in areas in which the Company conducts operations being less favorable than expected; interest rate risk; legislation or regulatory changes which adversely affect the ability of the consolidated Company to conduct business combinations or new operations; adverse results from current or future litigation, regulatory examination or other legal and/or regulatory actions, including as a result of the Company's participation in and execution of government programs related to the COVID-19 pandemic and related variants; higher inflation and its impacts; the effects of war or other conflicts including the impacts related to or resulting from Russia’s military action in Ukraine; risks related to the Company’s recently completed acquisitions, including that the anticipated benefits from the recently completed acquisitions are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions or other unexpected factors or events; the risks associated with the Company’s pursuit of future acquisitions; and general competitive, economic, political and market conditions or other unexpected factors or events. These and other factors, risks and uncertainties could cause the actual results, performance or achievements of the Company to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Many of these factors are beyond the Company’s ability to control or predict. Forward-looking statements speak only as of the date on which such statements are made. These forward-looking statements are based upon information presently known to the Company’s management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in the Company’s filings with the SEC, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, under the captions “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors,” and in the Company’s quarterly reports on Form 10-Q and current reports on Form 8-K. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made, or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on these forward-looking statements. Certain of the information contained herein may be derived from information provided by industry sources. The Company believes that such information is accurate and that the sources from which it has been obtained are reliable. The Company cannot guarantee the accuracy of such information, however, and has not independently verified such information. The Company is not making any implied or express representation or warranty as to the accuracy or completeness of the information summarized herein or made available in connection with any further investigation of the Company. The Company expressly disclaims any and all liability which may be based on such information, errors therein or omissions therefrom. This Presentation contains certain pro forma and projected information as part of its forward-looking statements, including projected pro forma information that reflects the Company's current expectations and assumptions. This pro forma information does not purport to present the results that the Company will actually realize. Offering Disclaimer
4 Statements included in this Presentation include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measure to GAAP financial measures. The non-GAAP financial measures used in this presentation include the following: tangible equity to tangible assets, return on average tangible common equity, tangible equity, and operating revenue. The most comparable GAAP measures are total equity to total assets, return on average assets, total equity and revenue, respectively. Tangible equity to tangible assets, return on average tangible common equity, and tangible equity all exclude total intangible assets. Operating revenue is a combination of net interest income and noninterest income. Management uses these non-GAAP financial measures in its analysis of the Company's performance and believes these presentations provide useful supplemental information, and a clearer understanding of the Company’s performance, and if not provided would be requested by the investor community. The Company believes the non-GAAP measures enhance investors' understanding of the Company's business and performance. These measures are also useful in understanding performance trends and facilitate comparisons with the performance of other financial institutions. The limitations associated with operating measures are the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP. Non-GAAP Financial Measures
5 Executive Summary 6I Management Team & Ownership Information 18II Assets Highlights 24III Liabilities Highlights 31IV Capital Highlights 34V Income Statement Highlights 37VI Appendix 44VII Table of Contents
6 I. Executive Summary
7 CBAN / NASDAQ Global Market 10-year term, 5-year no-call period Colony Bankcorp, Inc., the financial holding company of Colony Bank (the “Bank”) May 2022 Coupon Optional Redemption Regulatory Capital Use of Proceeds Expected Pricing Date Sole Placement Agent Issuer Ticker / Exchange Aggregate Principal Size Term Kroll Bond Rating Agency BBB-Credit Rating(1) Structured to comply with requirements for Tier 2 capital treatment at the holding company and, to the extent proceeds are contributed to the Bank, Tier 1 capital treatment at the Bank General corporate purposes $40 million Fixed [X%] for 5 years; Floating at SOFR + X% thereafter Redeemable at par in whole or in part any time after 5 years from date of issuance Terms of the Offered Securities Performance Trust Capital Partners, LLC (1) A rating is not a recommendation to buy, sell or hold securities. Ratings may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating organization has its own methodology for assigning ratings and, accordingly, each rating should be evaluated independently of any other rating. Security Fixed-to-Floating Rate Subordinated Notes due 2032 Offering Type Regulation D Private Placement
8 Franchise Footprint(1) Company Overview Company Profile Source: S&P Capital IQ Pro; company-provided documents (1) The map above does not include the Company’s loan production office in Birmingham, Alabama (2) Community banks defined as banks having less than $10.0 billion in total assets as of March 31, 2022 that provide a full suite of consumer and commercial products (3) See “Reconciliation of Non-GAAP Measures” on slide 52 ▪ Holding Company for Colony Bank was founded in 1982 ▪ Headquartered in Fitzgerald, Georgia ▪ $2.7 billion in total assets at March 31, 2022 ▪ Completed the acquisition of SouthCrest Financial Group, Inc. on August 1, 2021, creating Georgia’s largest community bank and fourth largest bank headquartered in the State (2) ▪ Created Colony Insurance subsidiary and acquired seven insurance agencies in 2021 ▪ 38 locations in Georgia and Alabama ▪ Track record of solid organic growth and strong financial performance ▪ Announced a cost efficiency initiative in first quarter of 2022 is expected to save $3.0 million per year starting in late third quarter 2022 Statesboro Savannah Fitzgerald Columbus Albany Valdosta LaGrange Douglas Macon Athens Augusta Chickamauga Canton Rockmart ……….Banking Branches (31) ……….Loan Production / Mortgage Offices (7) (dollars shown in thousands) 2019 2020 2021 2022Q1 Total Assets 1,511,400$ 1,760,944$ 2,687,322$ 2,682,488$ Total Loans 978,890$ 1,111,889$ 1,376,127$ 1,378,260$ Total Deposits 1,296,271$ 1,447,698$ 2,382,541$ 2,385,769$ Total Equity 164,476$ 176,967$ 243,283$ 236,421$ Loans / Deposits 75.52% 76.80% 57.76% 57.77% NPAs / Assets 1.08% 1.24% 0.42% 0.24% TCE / TA(3) 9.72% 9.09% 6.92% 6.67% Net Interest Margin 3.72% 3.56% 3.44% 3.09% ROAA 0.87% 0.77% 0.91% 0.84% ROAE 8.36% 7.48% 9.53% 9.44% Bank Financial Highlights
9 Experienced Management Team ▪ T. Heath Fountain (President & Chief Executive Officer) has over 21 years of banking experience ▪ Andy Borrmann (Executive Vice President & Chief Financial Officer) has over 18 years of banking experience and has been on the leadership team since the merger with SouthCrest Financial Group, Inc. that closed in August 2021 ▪ Lenny Bateman (Executive Vice President & Chief Credit Officer) has over 25 years of banking experience Robust Financial Performance ▪ Strong earnings highlighted by 2021Y ROAA of 0.89% and ROAE of 10.60% ▪ ROAA of 0.79% and ROAE of 8.76% for the quarter ended March 31, 2022 ▪ Annualized net interest margin has not fallen below 3.00% over the past 20 years; net interest margin of 3.09% for the quarter ended March 31, 2022 ▪ Approximately 12.5x debt service coverage post issuance based on 2022 consensus estimates(1) ▪ Net income increased to $5.3 million for the first quarter of 2022, compared to fourth quarter 2021 net income of $4.2 million Strong Capital Ratios ▪ The Bank will be well capitalized post-raise with a pro forma tier 1 risk-based ratio of 13.56% and leverage ratio of 8.82%(2) ▪ The Company’s debt / equity ratio will be 25.5% and double leverage ratio will be 102.5% post capital raise Pristine Asset Quality and Diversified Loan Portfolio ▪ NPAs / Assets of 0.25% at March 31, 2022 and Net Chargeoffs / Average Loans of 0.01% for the first quarter of 2022 ▪ Loan Loss Reserves / Gross Loans of 0.94% at March 31, 2022 (not reflective of additional merger-related credit marks) ▪ The Company’s loans / deposits ratio was 57.6% as of March 31, 2022 Continued Franchise Expansion in Attractive Markets ▪ The acquisition of SouthCrest Financial Group, Inc. that closed on 08/01/2021 solidified the Company as the largest community bank and fourth largest bank headquartered in the state of Georgia(3) Balanced Risk Profile ▪ PT Score™ of 185 (out of 500+) as of March 31, 2022 BEFORE the capital raise suggests low structural risk and a low overall risk score within the PT Score™ risk-reward spectrum; Pro Forma PT Score™ of 130 at March 31, 2023 with $19.1 million downstreamed to the Bank as equity Investment Highlights Source: S&P Capital IQ Pro; company-provided documents Note: Past performance does not guarantee future results (1) See page 15 for pro forma debt service coverage information (2) See page 14 for pro forma capital structure information (3) Community banks defined as banks having less than $10.0 billion in total assets as of March 31, 2022 that provide a full suite of consumer and commercial products
10 782 869 998 1,108 1,214 1,209 1,253 1,307 1,276 1,195 1,139 1,149 1,147 1,174 1,210 1,233 1,252 1,515 1,764 2,692 2,687 - 500 1,000 1,500 2,000 2,500 3,000 Company Timeline Source: S&P Capital IQ Pro; company-provided documents Acquired 1 branch from Planters First ($20mm in loans; $10mm in deposits) Acquired LBC Bancshares, Inc. on 5/1/19 ($207mm in assets) Acquired PFB Mortgage (>$100mm in loan production in 2019) Acquired East Georgia Homebuilder loan portfolio ($47mm in loans) Closed acquisition of SouthCrest Financial Group, Inc. on 8/1/21 (over $700mm in assets) Created Colony insurance subsidiary and acquired seven insurance agencies in 2021 Completed $63.5mm equity offering August - October 2021 October 2018 May 2019 May 2019 February 2020 August 2021 February 2022 2001 – 2022Q1 Total Assets ($MMs)
11 February 2022 Common Equity Offering Source: S&P Capital IQ Pro; equity offering press release (1) See “Reconciliation of Non-GAAP Measures” on slide 52 ▪ February 10, 2022 – The Company completed an underwritten public offering of 3,848,485 shares of its common stock (which included a full exercise of the option by the underwriters) at a public offering price of $16.50 per share for gross proceeds of approximately $63.5 million ▪ The net proceeds to the Company after underwriting discounts and estimated expenses, and including the underwriters’ exercise of the option, were approximately $59.5 million ▪ The net proceeds of the offering more than offset the change in AOCI in the first quarter of 2022 ▪ Consolidated TCE/TA increased from 5.98% at 12/31/21 to 7.25% at 3/31/22 157,412 5,324 (1,477) 59,750 (31,027) 469 190,451 ($50,000) $0 $50,000 $100,000 $150,000 $200,000 12/31/21 TCE Q1 Net Income Dividend to Shareholders Change in Common Stock & Surplus Change in AOCI Reduction in Intangibles 3/31/22 TCE ($ in thousands) Tangible Common Equity Net Changes in Q1 2022 TCE/TA(1) = 5.98% TCE/TA(1) = 7.25%
12 Attractive Markets Source: S&P Capital IQ Pro Note: Includes top 11 CBAN MSAs (total of 17 MSAs); Branch-level financial detail based on FDIC data as of June 30, 2021; Demographic data is estimated as of January 1, 2022 and based on 2021 U.S. Census data and annual surveys performed by Nielsen Douglas Statesboro 2022 - 2027 Projected Population Growth 6.16% 2022 - 2027 Projected Household Income Growth 18.00% 5.38% 5.24% 4.57% 4.43% 3.61% 3.39% 3.02% 2.47% 2.28% 2.14% 1.50% 0.00% 3.00% 4.50% 6.00% Statesboro Atlanta Warner Robins Savannah Chattanooga Valdosta Cedartown Columbus La Grange Douglas Tifton 12.60% 11.85% 11.58% 11.30% 10.37% 10.12% 10.05% 9.86% 9.79% 9.79% 9.64% 9.00% 6.00% 3.00% 0.00% 12.00% 15.00% Cedartown Atlanta Columbus Valdosta Dublin Moultrie Chattanooga Tifton Thomaston CBAN MSA
13 Noninterest Income Divisions ▪ Increased volume in mortgage division production: ▪ $97.2mm in production in 1Q22 ▪ $405.0mm in production in FY 2021 ▪ $337.9mm in production in FY 2020 ▪ Added experienced origination teams in Athens, Atlanta, Augusta, LaGrange, and Savannah, focused on expanding business ▪ 55 full-time employees within the mortgage division ▪ Originators are focused on purchase business through relationships with real estate agents and builders Source: Company-provided documents The Company has significant noninterest income contributions that are countercyclical and provide meaningful cash flow in varying interest rate environments ▪ Closed $5.8mm in SBA loans and sold $13.5mm in SBA loans during 1Q22 ▪ Closed $100.0mm and sold $58.3mm during in 2021 ▪ Strong loan pipeline expected for 2Q22 ▪ Originated loans under SBA Paycheck Protection Program ("PPP") resulting in 950 loans totaling over $52.4mm in 2021 ▪ Originated 1,672 PPP loans totaling over $137.8mm in 2020 ▪ $387k in PPP loans remained on the books as of March 31, 2022 Mortgage Small Business Specialty Lending
14 Source: S&P Capital IQ Pro Pro Forma Impact - $40mm Issuance Actual Sub Debt Pro Forma Bank Level Pro Forma Regulatory Capital 03/31/22 Adj. 03/31/22 Common Equity Before Adjustments 236,422$ 19,060$ 255,482$ Less: DTAs from NOL and Tax Credit 131 – 131 Less: Goodwill Net of DTLs 52,882 – 52,882 Less: Other Intangible Assets Net of DTLs 5,808 – 5,808 Less: AOCI - Unrealized Gains (37,202) – (37,202) Common Equity Tier 1 Capital 214,803 19,060 233,863 Additional Tier 1 Capital – – – Total Tier 1 Capital 214,803$ 19,060$ 233,863$ Tier 2 Capital Instruments -$ -$ -$ ALLL Includable in Tier 2 Capital 12,919 – 12,919 Total Tier 2 Capital 12,919 – 12,919 Total Capital 227,722$ 19,060$ 246,782$ Average Total Assets 2,689,968 19,060 2,709,028 Less: Deductions from CET1 and Additional T1 58,821 – 58,821 Total Assets for Leverage Ratio 2,631,147 19,060 2,650,207 Total Risk-Weighted Assets 1,721,185 3,812 1,724,997 Common Equity Tier 1 Ratio 12.48% 13.56% Leverage Ratio 8.16% 8.82% Tier 1 Risk-Based Ratio 12.48% 13.56% Total Risk-Based Capital Ratio 13.23% 14.31% Actual Sub Debt Pro Forma Consolidated Pro Forma Regulatory Capital 03/31/22 Adj. 03/31/22 Common Equity Before Adjustments 250,277$ (940)$ 249,337$ Less: DTAs from NOL and Tax Credit 131 – 131 Less: Goodwill Net of DTLs 52,882 – 52,882 Less: Other Intangible Assets Net of DTLs 5,808 – 5,808 Less: AOCI - Unrealized Gains (37,202) – (37,202) Common Equity Tier 1 Capital Pre-Deductions 228,658 (940) 227,718 Additional Tier 1 Capital 23,500$ – 23,500 Total Tier 1 Capital 252,158$ (940)$ 251,218$ Tier 2 Capital Instruments -$ 40,000$ 40,000$ ALLL Includable in Tier 2 Capital 12,919 – 12,919 Total Tier 2 Capital 12,919 40,000 52,919 Total Capital 265,077$ 39,060$ 304,137$ Average Total Consolidated Assets 2,722,500$ 39,060 2,761,560 Less: Deductions from CET1 and Additional T1 58,821 – 58,821 Total Assets for Leverage Ratio 2,663,679 39,060 2,702,739 Total Risk-Weighted Assets 1,722,500 7,812 1,730,312 Common Equity Tier 1 Ratio 13.27% 13.16% Leverage Ratio 9.47% 9.29% Tier 1 Risk-Based Ratio 14.64% 14.52% Total Risk-Based Capital Ratio 15.39% 17.58% ▪ Analysis assumes $19.1 million of subordinated debt gross proceeds are downstreamed to the Bank ▪ $20 million of the subordinated debt gross proceeds will be held at the Company to maximize flexibility ▪ Assumes a 20% risk weighting on subordinated debt net proceeds and 2.35% total transaction costs related to the capital raise ($000s) ($000s) Assumptions Combined with approximately $28.5mm of cash currently at the Holding Company, the new issuance will result in the Company retaining approximately $48.5mm at the Holding Company that is available to be downstreamed to the Bank, held for debt service coverage, and other general corporate purposes
15 ($ in thousands) Interest Coverage 2022E 2022 Pro Forma Consolidated Pre-Tax Earnings Consolidated Pre-Tax Income 31,737 31,737 Interest Expense on Previously Held Debt 589 589 A Pre-Tax Earnings Before BHC Debt Interest Expense 32,326 32,326 BHC Debt Interest Expense New Sub Debt Interest Expense at 4.75% - 1,900 New Sub Debt Interest Expense at 5.00% - 2,000 New Sub Debt Interest Expense at 5.25% - 2,100 Interest Expense on Previously Held Debt 589 589 B Total Interest Expense - New Sub Debt at 4.75% 589 2,489 C Total Interest Expense - New Sub Debt at 5.00% 589 2,589 D Total Interest Expense - New Sub Debt at 5.25% 589 2,689 Pro Forma Interest Coverage - A / B 54.9x 13.0x Pro Forma Interest Coverage - A / C 54.9x 12.5x Pro Forma Interest Coverage - A / D 54.9x 12.0x Estimate Pro Forma Pro Forma Debt / Equity and Double Leverage 03/31/22 03/31/22 Consolidated Equity $250,277 $249,337 Existing TruPS 23,500 23,500 Newly Issued Sub Debt - 40,000 Debt / Equity 9.4% 25.5% Debt / Equity (ex. AOCI) 8.2% 22.2% Bank Equity $236,422 $255,482 Double Leverage Ratio 94.5% 102.5% Tier 1 Capital Double Leverage Ratio 95.0% 102.2% (2) (3) Debt Service Coverage Ratio - $40mm Issuance Source: S&P Capital IQ Pro (1) Reflects consensus analyst EBT estimate as of 4/25/22 (2) Includes one month of 2022 holding company debt interest expense before payoff and estimated TruPS interest expense for full year (3) Pro Forma Consolidated Equity assumes total transaction costs of 2.35% (1)
16 Note: PT Score™ is a proprietary risk assessment system created using numerous call report based ratios selected by Performance Trust. PT Score™ is based on bank level data and does not incorporate holding company leverage or any other consolidated financial metrics. PT Score™ is based on unadjusted call report data and does not incorporate adjustments for one-time or other unusual items. PT Score™ is a risk management model designed to identify, measure, and track significant risk trends in depository financial institutions. An institution’s PT Score™ corresponds to a CAMELS equivalent rating to help provide an accurate picture of such institution’s level of risk. An institution’s score ranges from 0 to 500. The higher an institution’s PT Score™, the higher the implied level of risk. With respect to the information contained herein that has been obtained from public sources, while Performance Trust believes this information to be reliable, Performance Trust does not guarantee its accuracy, adequacy or completeness and is not responsible for any errors or omissions or for the results obtained from the use of such information. It is intended solely for the use of the individual or entity to whom it is addressed. The information is derived from research by Performance Trust. It is not a legal opinion and should not be construed to provide legal advice. The content is subject to change at any time and without notice. Relative Risk Analysis – PT ScoreTM Source: Performance Trust PT Score Note: PT Score Overview using March 31, 2022 financial data
17 Analysis includes the estimated effect of a $40.0 million sub debt issuance at the Company with $19.1 million of proceeds downstreamed to the Bank as common equity capital immediately. The timing and amount of the actual capital infusion to the Bank may differ. All other simulation adjustments based on standard PT Score assumptions, including no additional leverage or growth, no improvement or deterioration in credit quality, and a static balance sheet as of March 31, 2022. Relative Risk Analysis – PT ScoreTM Pro Forma Source: Performance Trust PT Score Note: PT Score Overview using March 31, 2022 financial data
18 II. Management Team & Ownership Information
19 Key Executive Officers Name / Position Age Background T. Heath Fountain President & Chief Executive Officer 46 Mr. Thomas Heath Fountain, CPA, has been President and Chief Executive Officer of the Company since July 2018. He previously served as Chief Executive Officer of Planters First Bank since July 2015. During his tenure at Planters First Bank, Mr. Fountain led growth initiatives that included adding two new markets, a secondary market mortgage division, and increasing loans and deposits over $50 million in three years. Prior to this, Mr. Fountain joined Heritage Financial Group, Inc. (NASDAQ: HBOS) in 2003 where he served as Chief Financial Officer since 2007 as well as Chief Administrative Officer and Executive Vice President since 2011. Mr. Fountain was a key member of Heritage’s executive management team that grew the Company from less than $400 million in assets and 6 offices in Albany, GA to $1.8 billion in assets and over 50 offices at the time of its ultimate sale to Renasant Corporation in July 2015. He is a Certified Public Accountant and has an accounting degree from the University of Georgia. Years in Banking: 21 Years at the Company: 3 David Andrew “Andy” Borrmann Executive Vice President & Chief Financial Officer 51 Mr. David Andrew Borrmann served as the Chief Financial Officer at SouthCrest Financial Group, Inc. before joining the Company in 2021. He began as Executive Vice President and Chief Strategy Officer of Colony Bankcorp, Inc in August 2021 and was recently promoted to Chief Financial Officer while still retaining his status of Executive Vice President. Mr. Borrmann served as Senior Vice President of Finance at SouthCrest Financial Group, Inc. since September 2011. Mr. Borrmann has financial analysis and strategy experience. Mr. Borrmann served as a Vice President of FIG Equity Research at Morgan Keegan & Company, Inc. and Morgan Keegan & Company, Inc., Research Division and expanded its coverage of small and community banks in the southeastern United States. He spent three years covering financial institutions and spent six years developing quantitatively driven stock selection models for both buy-side and sell-side firms. He served as an Equity Analyst at SunTrust Robinson Humphrey, Inc., Research Division. He is a Graduate of Arizona State University. Years in Banking: 18 Years at the Company: 1 Source: Company-provided documents
20 Key Executive Officers, continued Name / Position Age Background Edward "Lee" Bagwell Executive Vice President, Chief Risk Officer & General Counsel 54 Mr. Edward Lee Bagwell, III has been Executive Vice President, Chief Risk Officer and General Counsel of the Company and the Bank since May 2019. He served as Executive Vice President and Chief Credit Officer of the Company and the Bank from August 2017 until May 2019 and as Senior Vice President of the Company and Bank from October 2016 until August 2017. Mr. Bagwell has been the Bank's in-house legal counsel since 2008. Mr. Bagwell joined the Company in June 2003 as a Commercial Lender and in-house attorney with Colony Bank Southeast. Beginning in 2008, he served as in-house legal counsel of the Company and was in charge of the Bank's special assets. Prior to that time, Mr. Bagwell was in the private practice of law in Douglas, GA. Mr. Bagwell earned an Associate Degree in Business from South Georgia College in 1987, a BBA in Finance from the University of Georgia in 1989 and his Juris Doctorate from The Cumberland School of Law in 1992. Years in Banking: 18 Years at the Company: 18 Leonard H. “Lenny” Bateman Executive Vice President & Chief Credit Officer 48 Mr. Leonard H. “Lenny” Bateman, Jr. has been Executive Vice President and Chief Credit Officer of the Company since June 2020. He served as Senior Vice President and Senior Credit Officer at the Company from 2019 until June 2020. He previously served as President and CEO of Calumet Bank (subsidiary of LBC Bancshares, Inc.) from 2012 until May 2019, when it was acquired by the Company. He previously served as the Chief Credit Officer of the State Bank of Cochran in GA and as a Regional Credit Officer for Flag Bank for more than 6 years. A graduate of Valdosta State University, Mr. Bateman worked for SunTrust Bank following college. He is a Member of the LaGrange Lions Club and served as the President for the Troup/Chambers County Habitat for Humanity during 2010 - 2011. Currently, Mr. Bateman is serving on the Community Bankers Association Leadership Division Board of Directors. Years in Banking: 25 Years at the Company: 2 Source: Company-provided documents
21 Key Executive Officers, continued Name / Position Age Background Brian D. Schmitt Executive Vice Chairman 60 Mr. Brian D. Schmitt has been Executive Vice Chairman of the Company since August 2021. Formerly, Mr. Schmitt served as CEO and President of SouthCrest Financial Group, Inc. beginning August 2016. He has considerable experience in both business banking and the operation of financial institutions. His banking career began in 1983 at Home Federal, FSB. He served as an Atlanta Market CEO, Executive Vice President and Director of Mergers & Acquisitions of Heritage Financial Group, Inc. From 2006 to 2013, he served as the President and CEO of The PrivateBank and Trust Company's Georgia division. He founded The PrivateBank (Atlanta, GA) in 2001 and served as its Chairman, CEO and President. He served as the CEO and President of Piedmont Bancshares Inc. and its subsidiary, Piedmont Bank of Georgia. He founded Piedmont Bank of Georgia in 2001. He served as an Executive Vice President of Lending at Premier Bancshares, Inc. He has served as a Director of SouthCrest Financial Group Inc., SouthCrest Bank N.A., Director of The PrivateBank (Atlanta, GA)., and Director of Federal Home Loan Bank of Atlanta. Mr. Schmitt holds Bachelor's Degree in Finance from Troy State University. Years in Banking: 39 Years at the Company: 1 Kimberly Dockery Executive Vice President & Chief Administrative Officer 39 Ms. Kimberly C. Dockery serves as Chief Administrative Officer of the Company. Prior to joining the Company, Ms. Dockery served in a similar role as Chief Administrative Officer of Planters First Bank and also served in various management roles at Heritage Financial Group, Inc., where she supported organic and acquisitive growth initiatives. Years in Banking: 15 Years at the Company: 3 Source: Company-provided documents
22 Key Executive Officers, continued Name / Position Age Background Max "Eddie" Hoyle Jr. Executive Vice President & Chief Banking Officer 64 Mr. M. Edward “Eddie” Hoyle, Jr. has been Executive Vice President of the Company since June 2011 and Chief Banking Officer since May 2019. He served as Regional Executive Officer from June 2011 until May 2019. He is primarily responsible for overseeing the Company’s west region and has been with the Company since February 2011. Mr. Hoyle was with Habersham Bank for approximately ten years and served as its Senior Vice President/Commercial Lending. He has been in the banking industry since March 1979. Years in Banking: 43 Years at the Company: 10 Source: Company-provided documents
23 Board Members & Insiders 7.6% Other 92.4% Holder Investor Type Shares Held Ownership (%) Jonathan Ross Director 484,543 2.76% Scott Downing Director 221,007 1.26% Harold Wyatt, I I I Director 132,850 0.75% Terry Hester Director 104,179 0.59% Brian Schmitt Director, Executive Officer 73,533 0.42% Mark Massee Director 63,464 0.36% T. Heath Fountain Director, Executive Officer 51,961 0.30% Edward Loomis , Jr. Director 48,000 0.27% M. Frederick Dwozan, Jr. Director 38,237 0.22% David Borrmann Executive Officer 25,106 0.14% M. Eddie Hoyle Executive Officer 25,693 0.14% Edward Bagwel l , I I I Executive Officer 22,287 0.13% Leonard Bateman, Jr. Executive Officer 17,616 0.10% Kimberly Dockery Executive Officer 14,840 0.08% Matthew Reed Director 11,560 0.07% Meagan Mowry Director 9,411 0.05% Total Insider Ownership 1,344,287 7.6% Ownership Distribution By Holder TypeOwnership Disclosures ▪ Sizeable insider ownership means the board and management team have “skin in the game” ▪ Creates direct alignment with shareholders ▪ Promotes decision making that is long term in nature Ownership Information Source: Company-provided documents; Reflects beneficial ownership as of March 25, 2022
24 III. Assets Highlights
25 Total LoansTotal Assets ($ in millions) ($ in millions) $1,249.8 $1,511.4 $1,760.9 $2,687.3 $2,682.5 – $750.0 $1,500.0 $2,250.0 $3,000.0 2018Y 2019Y 2020Y 2021Y 2022Q1 $781.5 $978.9 $1,111.9 $1,376.1 $1,378.3 – $400.0 $800.0 $1,200.0 $1,600.0 2018Y 2019Y 2020Y 2021Y 2022Q1 $1,086.1 $1,296.3 $1,447.7 $2,382.5 $2,385.8 – $750.0 $1,500.0 $2,250.0 $3,000.0 2018Y 2019Y 2020Y 2021Y 2022Q1 $117.0 $164.5 $177.0 $243.3 $236.4 – $75.0 $150.0 $225.0 $300.0 2018Y 2019Y 2020Y 2021Y 2022Q1 Total EquityTotal Deposits ($ in millions)($ in millions) Balance Sheet Growth Source: S&P Capital IQ Pro Note: Bank level data
26 Portfolio Management Statistics03/31/22 Asset Class Breakdown ▪ The investment portfolio consists largely of commercial and residential mortgage-backed securities ▪ Historical investment portfolio returns(1): ▪ 1 year: (4.22%), 16th percentile(2) ▪ This number accounts for the acquisition of SouthCrest Financial Group, Inc. which closed on 8/1/21 ▪ 3 year: 0.56%, 27th percentile ▪ 5 year: 1.24%, 34th percentile ▪ Other Securities Portfolio information (3): ▪ Book yield: 1.67% ▪ Taxable equivalent yield: 1.71% Govt & Agency Secs 1% State & Political Subdiv Secs 26% RMBS 30% Treasury Secs 12% Other Securities 5% CMBS 23% ABS 3% Investment Portfolio Composition & Performance Source: S&P Capital IQ Pro Note: Bank level data; Past performance does not guarantee future results (1) Total return calculations based on Performance Trust Total Return calculations as of March 31, 2022 (2) Securities portfolio marked to market when US 10-year Treasury closed at 1.23% (3) Uniform Bank Performance Report for the Bank as of March 31, 2022
27 Q1 2022 Loan CompositionLoan Trends ($MM) ▪ As of 03/31/2022, the Bank has $387 thousand of PPP loans held on balance sheet ▪ Pre-Raise Concentrations: ▪ C&D: 75.1% ▪ CRE: 293.0% $782 $979 $1,112 $1,376 $1,378 $- $400 $800 $1,200 $1,600 2018Y 2019Y 2020Y 2021Y 2022Q1 Farm, 5.2% 1-4 Family 15.8% Ag. Prod., 1.8% C&I (excl. PPP) 8.2% Non Owner Occ. CRE 32.6% Owner Occ. CRE 17.2% Consumer, 1.3% Constr & Land Dev, 12.4% Other 2.2% Multifam 3.4% Loan Portfolio Diversification & Growth Source: S&P Capital IQ Pro Note: Bank level data
28 Colony Bank Loan Composition Since 2018 12/31/2018 12/31/2019 12/31/2020 12/31/2021 03/31/2022 Loan Composition Balance % of Total Balance % of Total Balance % of Total Balance % of Total Balance % of Total Construction 60,349 7.7% 96,159 9.8% 121,072 10.9% 165,532 12.0% 170,911 12.4% 1-4 Family 187,714 24.0% 205,583 21.0% 232,602 20.9% 228,169 16.6% 217,342 15.8% Multifamily 35,314 4.5% 36,869 3.8% 26,084 2.3% 47,922 3.5% 46,221 3.4% Comm RE (Non Farm/Res) 338,219 43.3% 438,181 44.8% 430,753 38.7% 670,270 48.7% 687,242 49.9% C&I 57,410 7.3% 76,237 7.8% 174,322 15.7% 117,489 8.5% 112,609 8.2% Farm RE 62,709 8.0% 65,082 6.6% 66,238 6.0% 71,603 5.2% 71,476 5.2% Agricultural 16,799 2.1% 14,737 1.5% 16,722 1.5% 22,787 1.7% 24,492 1.8% Consumer 18,485 2.4% 22,656 2.3% 21,615 1.9% 18,632 1.4% 18,202 1.3% Other (Less Unearned Income) 4,527 0.6% 23,386 2.4% 22,481 2.0% 33,723 2.5% 29,765 2.2% Total Gross Loans $781,526 100.0% $978,890 100.0% $1,111,889 100.0% $1,376,127 100.0% $1,378,260 100.0% Yield on 1-4 Family Loans 5.42% 5.80% 5.47% 5.65% 5.43% Yield on All Other RE Loans 5.16% 5.52% 5.22% 4.68% 4.61% Yield on C&I Loans 5.58% 5.86% 3.66% 7.02% 5.39% Yield on Loans and Leases 5.27% 5.63% 5.11% 5.07% 4.70% Yield on Earning Assets 4.27% 4.56% 3.98% 3.62% 3.23% ($ in thousands) Historical Loan Composition & Yields Source: S&P Capital IQ Pro Note: Bank level data
29 As of 03/31/2022: ▪ Strong asset quality with NPAs / Assets of 0.24% ▪ 2022YTD Net Chargeoffs / Avg. Loans of 0.01% ▪ Loan Loss Reserves to Gross Loans of 0.94% ▪ $246k of OREO Portfolio Management StatisticsQ1 2022 Nonaccrual Loans By Type Owner Occ. CRE, 7.2% 1-4 Family, 65.5% Farm, 8.7% Consumer, 0.4% Constr & Land Dev, 1.1% C & I, 7.8% Other, 1.6% Non-Owner Occupied CRE, 7.7% Asset Quality Detail Source: S&P Capital IQ Pro Note: Bank level data
30 Loan Loss Reserves / NPLs NCOs / Avg. Loans Loan Loss Reserves / Total Loans NPAs / Assets 1.51% 1.08% 1.24% 0.42% 0.24% 0.00% 0.50% 1.00% 1.50% 2.00% 2018Y 2019Y 2020Y 2021Y 2022Q1 0.06% 0.17% 0.12% -0.01% 0.01% -0.25% 0.00% 0.25% 0.50% 0.75% 2018Y 2019Y 2020Y 2021Y 2022Q1 0.93% 0.70% 1.09% 0.94% 0.94% 0.00% 0.75% 1.50% 2.25% 3.00% 2018Y 2019Y 2020Y 2021Y 2022Q1 43% 46% 58% 116% 207% 0% 75% 150% 225% 300% 2018Y 2019Y 2020Y 2021Y 2022Q1 Asset Quality & Reserve Coverage Ratios Source: S&P Capital IQ Pro Note: Bank level data
31 IV. Liabilities Highlights
32 $2.4B Total Deposits Deposits ($000) NIB 592,969$ 24.9% IB Demand, Savings, & MMDA 1,453,797 60.9% Retail Time (<100k) 269,662 11.3% Jumbo Time (>100k) 69,341 2.9% Total 2,385,769$ 100.0% MRQ Cost of Deposits: 0.10% Loans / Deposits: 57.8% NIB 24.9% IB Demand, Savings, & MMDA 60.9% Retail Time (<100k) 11.3% Jumbo Time (>100k) 2.9% Deposit TrendsQ1 2022 Deposit Composition $1,086 $1,296 $1,448 $2,383 $2,386 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2018Y 2019Y 2020Y 2021Y 2022Q1 ($ in millions) Deposit Growth & Composition Source: S&P Capital IQ Pro Note: Bank level data
33 1 3 4 2 Fitzgerald, GA 2,021.00 2021 2021 2,021.00 Deposits Market Rank Institution (ST) Branches ($000s) Share (%) ` 1 Colony Bankcorp Inc. (GA) 1 $305,288 54.32% 2 CBC Holding Company (GA) 2 $196,348 34.94% 3 Wells Fargo & Co. (CA) 1 $44,032 7.83% 4 Planters First Bancorp (GA) 1 $16,364 2.91% Total For Institutions In Market 5 $562,032 Atlanta, GA 2,021.00 2021 2021 2,021.00 Deposits Market Rank Institution (ST) Branches ($000s) Share (%) 1 Truist Financial Corp. (NC) 33 $43,499,556 36.19% 2 Bank of America Corporation (NC) 27 $28,778,604 23.95% 3 Wells Fargo & Co. (CA) 33 $19,822,960 16.49% 4 JPMorgan Chase & Co. (NY) 21 $4,360,336 3.63% 5 Synovus Financial Corp. (GA) 3 $4,118,733 3.43% 6 SouthState Corp. (FL) 5 $4,032,897 3.36% 7 Ameris Bancorp (GA) 12 $3,481,062 2.90% 8 Cadence Bank (MS) 3 $2,292,540 1.91% 9 Fifth Third Bancorp (OH) 6 $2,044,506 1.70% 10 The PNC Finl Svcs Grp (PA) 9 $1,371,293 1.14% 24 Colony Bankcorp Inc. (GA) 0 $153,147 0.13% Total For Institutions In Market 191 $120,186,099 LaGrange, GA 2,021.00 2021 2021 2,021.00 Deposits Market Rank Institution (ST) Branches ($000s) Share (%) 1 Synovus Financial Corp. (GA) 3 $388,330 33.21% 2 SouthState Corp. (FL) 2 $176,474 15.09% 3 Colony Bankcorp Inc. (GA) 1 $146,462 12.52% 4 Bank of America Corporation (NC) 1 $135,927 11.62% 5 Truist Financial Corp. (NC) 2 $116,036 9.92% 6 The PNC Finl Svcs Grp (PA) 2 $114,185 9.76% 7 Community Bankshares Inc. (GA) 2 $69,783 5.97% 8 Renasant Corp. (MS) 1 $22,274 1.90% Total For Institutions In Market 14 $1,169,471 Thomaston, GA 2,021.00 2021 2021 2,021.00 Deposits Market Rank Institution (ST) Branches ($000s) Share (%) 1 United Bank Corp. (GA) 2 $185,651 42.02% 2 Colony Bankcorp Inc. (GA) 1 $137,614 31.15% 3 WCG Bancshares Inc. (GA) 3 $111,439 25.22% 4 Peoples Bank of Georgia (GA) 1 $7,122 1.61% Total For Institutions In Market 7 $441,826 City Deposit Market Share Source: S&P Capital IQ Pro Note: Deposit composition as of June 30, 2021; data released annually as of June 30
34 V. Capital Highlights
35 9.1% 8.3% 8.2% 8.3% 9.4% 10.3% 10.7% 10.5% 10.3% 10.0% 9.9% 10.1% 9.8% 9.1% 7.5% 8.2% 12.7% 12.0% 13.0% 14.4% 16.3% 16.6% 17.3% 16.9% 16.0% 16.3% 15.5% 15.6% 14.2% 14.6% 12.2% 13.2% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% 18.0% 21.0% 24.0% 27.0% 30.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2007Y 2008Y 2009Y 2010Y 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 2021Y 2022Q1 Leverage Ratio Total Risk-Based Ratio Leverage Ratio Total Risk-Based Ratio Well-Capitalized Total Risk-Based Ratio(1) (10%) Well-Capitalized Leverage Ratio(1) (5%) Total Risk-Based Capital & Leverage Ratios – Bank Level Source: S&P Capital IQ Pro Note: Bank level data (1) “Expanded Community Bank Guide to the New Capital Rule for FDIC-Supervised Banks”
36 Tier 1 Risk-Based Ratio CET1 Ratio Total Risk-Based Ratio Leverage Ratio 9.77% 9.12% 7.53% 8.16% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 13.54% 13.48% 11.40% 12.48% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 13.54% 13.48% 11.41% 12.48% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 14.19% 14.56% 12.18% 13.23% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 Well-Capitalized Leverage Ratio(1) (5%) Well-Capitalized CET1 Ratio(1) (6.5%) Well-Capitalized Tier 1 Risk-Based Ratio(1) (8%) Well-Capitalized Total Risk-Based Ratio(1) (10%) Historical Regulatory Bank Capital Ratios Source: S&P Capital IQ Pro Note: Bank level data (1) “Expanded Community Bank Guide to the New Capital Rule for FDIC-Supervised Banks”
37 VI. Income Statement Highlights
38 0.28% 0.30% 0.48% 0.73% 0.80% 0.82% 0.74% 1.12% 0.87% 0.77% 0.91% 0.84% 2.97% 2.90% 4.64% 7.01% 7.82% 7.99% 7.77% 12.20% 9.48% 8.83% 12.09% 13.56% -25.00% -15.00% -5.00% 5.00% 15.00% 25.00% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 2021Y 2022YTD ROAA ROATCE ROAA ROATCE Historical Profitability Source: S&P Capital IQ Pro Note: Bank level data; 2022YTD values as of March 31, 2022; Past performance does not guarantee future results (1) See “Reconciliation of Non-GAAP Measures” on slide 52 (1)
39 $9,304 $14,082 $23,392 $36,377 $36,956 $- $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 2018Y 2019Y 2020Y 2021Y 2022YTD Net Interest Income Noninterest Expense Noninterest Income Core Net Revenue Detail Source: S&P Capital IQ Pro Note: Bank level data; 2022YTD values as of March 31, 2022; values are annualized where appropriate ($ in thousands) $51,057 $41,753 $63,408 $49,326 $34,044 $47,073 $58,495 $78,853 $87,420 $79,814 $56,422 $103,879 $67,502 $114,484 $77,528
40 5.27% 5.63% 5.11% 5.07% 4.70% 2.24% 2.39% 2.02% 1.74% 1.71% 0.61% 0.87% 0.43% 0.16% 0.13% 0.66% 0.88% 0.46% 0.21% 0.14% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 2018Y 2019Y 2020Y 2021Y 2022YTD Loan Yield Securities Yield (FTE) Cost of Int. Bearing Dep. Cost of Funds $41,753 $49,326 $56,422 $67,502 $77,528 3.63% 3.72% 3.56% 3.44% 3.09% 0.00% 1.50% 3.00% 4.50% 6.00% $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2018Y 2019Y 2020Y 2021Y 2022YTD Net Interest Income NIM ($ in thousands) Key Components of NII and NIMNet Interest Income (NII) and Net Interest Margin (NIM) Net Interest Income & Net Interest Margin Source: S&P Capital IQ Pro Note: Bank level data; 2022YTD values as of March 31, 2022; values are annualized where appropriate
41 66.5% 73.1% 72.0% 74.4% 74.2% 2.81% 3.32% 3.54% 3.77% 3.25% 0.00% 1.25% 2.50% 3.75% 5.00% 0.0% 25.0% 50.0% 75.0% 100.0% 2018Y 2019Y 2020Y 2021Y 2022YTD N o n in terest Exp en se / A vg. A ssets Ef fi ci en cy R at io Efficiency Ratio (FTE) Noninterest Expense / Avg. Assets 12.2% 9.5% 8.8% 12.1% 13.6% 1.1% 0.9% 0.8% 0.9% 0.8% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 2018Y 2019Y 2020Y 2021Y 2022YTD R O A AR O A TC E ROATCE ROAA ROATCE & ROAAEfficiency Ratio & Noninterest Exp. / Avg. Assets Profitability & Expense Controls Source: S&P Capital IQ Pro Note: Bank level data; 2022YTD values as of March 31, 2022 (1) See “Reconciliation of Non-GAAP Measures” on slide 52 (1)
42 3.66% 3.50% 3.67% 3.50% 3.20% 3.09% 1.86% 1.63% 2.21% 1.90% 2.10% 1.89% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2020Q4 2021Q1 2021Q2 2021Q3 2021Q4 2022Q1 Net Interest Margin Net Noninterest Expense /AA Net NIE / AA = (Noninterest Expense – Noninterest Income) / Avg. Assets Net Interest Margin vs. Net Noninterest Expense Source: S&P Capital IQ Pro Note: Bank level data; values are annualized where appropriate
43 Net Interest Income Sensitivity Profile Interest Rate Scenario -400 -300 -200 -100 Base 100 200 300 400 Net Interest Income Change -4.6% -4.5% -4.5% -3.2% 0.0% 7.1% 14.4% 21.7% 28.6% Economic Value of Equity Sensitivity Profile Interest Rate Scenario -400 -300 -200 -100 Base 100 200 300 400 Economic Value of Equity Change -38.3% -37.9% -37.2% -13.3% 0.0% 7.0% 10.8% 11.9% 11.3% Asset-Liability Management Profile Source: S&P Capital IQ Pro Note: Rate shock sensitivity profiles as of December 31, 2021
44 VII. Appendix
45 12/31/2018 For the Years Ended: 3/31/2022 12/31/2018 12/31/2019 12/31/2020 12/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 CAGR Balance Sheet Total Assets ($000) 1,249,790 1,511,400 1,760,944 2,687,322 1,751,548 2,508,968 2,687,322 2,682,488 26.5% Total Net Loans ($000) 781,526 978,890 1,111,889 1,376,127 1,053,528 1,336,557 1,376,127 1,378,260 19.1% Total Deposits ($000) 1,086,063 1,296,271 1,447,698 2,382,541 1,548,822 2,205,467 2,382,541 2,385,769 27.4% Tangible Equity ($000) 116,256 144,943 158,409 181,653 156,652 181,220 181,653 174,901 Loans / Deposits (%) 72.0 75.5 76.8 57.8 68.0 60.6 57.8 57.8 (Cash + Securities) / Assets (%) 33.1 29.7 31.8 42.1 34.7 38.9 42.1 40.7 TCE / TA (%) 9.3 9.7 9.1 6.9 9.0 7.4 6.9 6.7 Tier 1 Leverage Ratio (%) 10.1 9.8 9.1 7.5 8.8 8.6 7.5 8.2 Total Risk-Based Capital Ratio (%) 15.6 14.2 14.6 12.2 15.0 12.7 12.2 13.2 Profitability Net Income ($000) 13,506 12,293 12,657 19,015 4,119 5,878 3,870 5,662 ROAA (%) 1.12 0.87 0.77 0.91 0.93 1.05 0.60 0.84 ROAE (%) 12.15 8.36 7.48 9.53 9.52 11.26 6.38 9.44 ROATCE (%) 12.20 9.48 8.83 12.09 11.01 14.59 9.38 13.56 Net Interest Margin (%) 3.63 3.72 3.56 3.44 3.67 3.50 3.20 3.09 Efficiency Ratio (%) 66.5 73.1 72.0 74.4 75.0 74.6 79.1 74.2 Noninterest Inc / Operating Rev (%) 18.2 22.2 29.3 35.0 33.1 33.3 36.5 32.3 Noninterest Inc / AA (%) 0.8 1.0 1.4 1.7 1.7 1.6 1.7 1.4 Asset Quality (%) NPLs / Loans (%) 2.2 1.5 1.9 0.8 1.7 1.5 0.8 0.5 NPAs / Assets (%) 1.5 1.1 1.2 0.4 1.0 0.8 0.4 0.2 Texas Ratio (%) 15.3 10.8 12.8 5.9 10.6 10.9 5.9 3.5 Reserves / Loans (%) 0.93 0.70 1.09 0.94 1.22 0.96 0.94 0.94 NCOs / Avg Loans (%) 0.06 0.17 0.12 (0.01) (0.07) 0.05 0.01 0.01 Financial Highlights (Bank Regulatory) Source: S&P Capital IQ Pro Note: Bank level data (1) See “Reconciliation of Non-GAAP Measures” on slide 52 (1) (1) (1) (1)
46 12/31/2018 For the Years Ended: 3/31/2022 12/31/2018 12/31/2019 12/31/2020 12/31/2021 6/30/2021 9/30/2021 12/31/2021 3/31/2022 CAGR Balance Sheet Total Assets ($000) 1,251,878 1,515,313 1,763,974 2,691,715 1,755,518 2,512,581 2,691,715 2,686,788 26.5% Total Net Loans ($000) 774,249 972,027 1,099,762 1,363,217 1,040,657 1,323,680 1,363,217 1,365,341 19.1% Total Deposits ($000) 1,085,125 1,293,742 1,445,027 2,374,608 1,542,214 2,195,122 2,374,608 2,350,786 26.9% Total Equity ($000) 95,692 130,506 144,488 217,707 146,894 217,130 217,707 250,277 Tangible Common Equity ($000) 94,933 110,973 126,225 157,412 128,973 156,171 157,412 190,451 Loans / Deposits (%) 72.0 74.9 73.3 56.3 66.3 59.7 56.3 57.6 (Cash + Securities) / Assets (%) 33.2 30.1 32.2 42.7 35.2 40.3 42.7 42.1 TCE / TA (%) 7.6 7.4 7.2 6.0 7.4 6.4 6.0 7.2 Tier 1 Leverage Ratio (%) 10.2 8.9 8.5 7.3 8.5 8.4 7.3 9.5 Total Risk-Based Capital Ratio (%) 15.9 13.2 13.8 12.1 14.6 12.8 12.1 15.4 Profitability Net Income ($000) 11,917 10,211 11,815 18,659 3,997 5,583 4,159 5,324 ROAA (%) 0.99 0.72 0.70 0.89 0.90 0.98 0.64 0.79 ROAE (%) 13.33 8.73 8.56 10.60 11.04 11.33 7.71 8.76 Net Interest Margin (%) 3.55 3.61 3.50 3.39 3.63 3.43 3.18 3.09 Efficiency Ratio (%) 69.6 71.4 71.4 70.5 72.1 70.0 75.6 74.4 Noninterest Inc / Operating Rev (%) 18.9 22.5 28.8 35.5 33.6 34.6 36.7 32.2 Noninterest Inc / AA (%) 0.8 1.0 1.3 1.7 1.7 1.7 1.7 1.4 Asset Quality (%) NPLs / Loans (%) 3.1 2.2 2.0 0.9 2.1 1.8 0.9 0.5 NPAs / Assets (%) 2.1 1.5 1.3 0.5 1.2 1.0 0.5 0.3 Texas Ratio (%) 25.7 19.4 16.4 7.7 15.4 15.1 7.7 NA Reserves / Loans (%) 0.93 0.70 1.09 0.94 1.22 0.96 0.94 0.94 NCOs / Avg Loans (%) 0.06 0.17 0.12 (0.01) (0.07) 0.05 0.01 0.01 Select Consolidated Financial Data Source: S&P Capital IQ Pro (1) See “Reconciliation of Non-GAAP Measures” on slide 52 (1) (1) (1)
47 Tier 1 Risk-Based Ratio CET1 Ratio Total Risk-Based Ratio Leverage Ratio 8.92% 8.49% 7.25% 9.47% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 10.33% 10.62% 9.87% 13.29% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 12.52% 12.71% 11.28% 14.65% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 13.17% 13.78% 12.05% 15.40% 0.00% 6.00% 12.00% 18.00% 24.00% 2019Y 2020Y 2021Y 2022Q1 Historical Regulatory Consolidated Capital Ratios Source: S&P Capital IQ Pro
48 0.21% 0.23% 0.41% 0.67% 0.73% 0.75% 0.65% 0.99% 0.72% 0.70% 0.89% 0.79% 2.67% 2.74% 4.96% 7.95% 8.23% 8.66% 8.51% 13.33% 8.73% 8.56% 10.60% 8.76% -25.00% -15.00% -5.00% 5.00% 15.00% 25.00% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 2011Y 2012Y 2013Y 2014Y 2015Y 2016Y 2017Y 2018Y 2019Y 2020Y 2021Y 2022YTD ROAA ROAE ROAA ROAE Consolidated Profitability Trends Source: S&P Capital IQ Pro Note: 2022YTD values as of March 31, 2022; Past performance does not guarantee future results
49 Loan Loss Reserves / NPLs NCOs / Avg. Loans Loan Loss Reserves / Total Loans NPAs / Assets 2.10% 1.51% 1.29% 0.49% 0.25% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 2018Y 2019Y 2020Y 2021Y 2022Q1 0.06% 0.17% 0.12% -0.01% 0.01% -0.25% 0.00% 0.25% 0.50% 0.75% 2018Y 2019Y 2020Y 2021Y 2022Q1 0.93% 0.70% 1.09% 0.94% 0.94% 0.00% 0.75% 1.50% 2.25% 3.00% 2018Y 2019Y 2020Y 2021Y 2022Q1 30% 32% 56% 101% 204% 0% 75% 150% 225% 300% 2018Y 2019Y 2020Y 2021Y 2022Q1 Consolidated Asset Quality Trends Source: S&P Capital IQ Pro
50 At December 31, At March 31, (dollars shown in thousands) 2018 2019 2020 2021 2022 Assets Cash & Cash Equivalents 10,377$ 15,570$ 17,218$ 18,975$ 23,594$ Int. Bearing Deposits 49,779 88,522 166,288 178,257 132,823 Securities 353,066 347,332 380,814 938,164 960,301 Loans Held for Sale 2,978 14,364 55,682 52,162 38,055 Net Loans 774,249 961,951 1,047,376 1,325,067 1,341,113 Premises & Equipment 28,831 32,482 32,057 43,033 43,010 OREO 1,841 1,320 1,006 281 246 Goodwill 202 16,477 15,992 52,906 52,902 Other Assets 30,555 37,295 47,541 82,870 94,744 Total Assets 1,251,878 1,515,313 1,763,974 2,691,715 2,686,788 Liabilities Deposits 1,085,125$ 1,293,742$ 1,445,027$ 2,374,608$ 2,350,786$ Borrowings 68,229 85,792 167,081 88,448 75,941 Other Liabilites 2,832 5,273 7,378 10,952 9,784 Total Liabilities 1,156,186 1,384,807 1,619,486 2,474,008 2,436,511 Stockholders' Equity Common Equity 8,445$ 9,499$ 9,499$ 13,674$ 17,586$ Paid in Capital 25,978 43,667 43,215 111,021 166,859 Retained Earnings 69,459 76,978 84,993 99,189 103,036 AOCI (8,190) 362 6,781 (6,177) (37,204) Total Stockholders' Equity 95,692 130,506 144,488 217,707 250,277 Total Liabilities and Stockholders' Equity 1,251,878$ 1,515,313$ 1,763,974$ 2,691,715$ 2,686,788$ Consolidated Balance Sheet Source: S&P Capital IQ Pro; company-provided documents
51 Quarter Ended Year-Ended December 31, March 31, (dollars shown in thousands) 2018 2019 2020 2021 2022 Total Interest Income 49,022$ 60,483$ 63,125$ 70,586$ 20,237$ Total Interest Expense 8,226 12,637 7,880 4,397 1,049 Net Interest Income 40,797 47,846 55,245 66,189 19,188 Provision for Loan Losses (201) (1,104) (6,558) (700) (50) Net Interest Income after Provision for Loan Losses 40,596 46,742 48,687 65,489 19,138 Noninterest Income 9,621 14,004 24,244 36,290 9,152 Noninterest Expense: 35,300 48,136 58,301 78,625 21,805 Pre-Tax Net Income 14,918$ 12,610$ 14,630$ 23,154$ 6,485$ Income Tax Expense (3,000) (2,399) (2,815) (4,495) (1,161) Net Income 11,917$ 10,211$ 11,815$ 18,659$ 5,324$ Consolidated Income Statement Source: S&P Capital IQ Pro; company-provided documents
52 Reconciliation of Non-GAAP Measures Source: S&P Capital IQ Pro; company-provided documents 2021 2022 (Dollars shown in thousands, except per share data) First Quarter Second Quarter Third Quarter Fourth Quarter First Quarter Return on average tangible common equity reconciliation (Bank) Annualized period net income 20,592 16,476 23,512 15,480 22,648 Average tangible common equity 151,189 149,646 161,151 165,032 167,021 Return on average tangible common equity 13.62% 11.01% 14.59% 9.38% 13.56% Tangible common equity reconciliation (Bank) Total equity capital 170,859$ 175,353$ 242,179$ 243,283$ 236,421$ Total intangible assets 18,673 18,701 60,959 61,630 61,520 Tangible common equity 152,186$ 156,652$ 181,220$ 181,653$ 174,901$ Tangible common equity / tangible assets reconciliation (Bank) Tangible common equity 152,186 156,652 181,220 181,653 174,901 Tangible assets 1,777,265 1,732,847 2,448,009 2,625,692 2,620,968 Tangible common equity / tangible assets 8.56% 9.04% 7.40% 6.92% 6.67% Noninterest income / operating revenue reconciliation (Bank) Net interest income 14,532$ 15,268$ 18,403$ 19,299$ 19,382$ Total noninterest income 8,570 7,544 9,193 11,070 9,239 Operating reveune 23,102$ 22,812$ 27,596$ 30,369$ 28,621$ Noninterest income 8,570 7,544 9,193 11,070 9,239 Noninterest income / operating revenue 37.10% 33.07% 33.31% 36.45% 32.28% Tangible equity reconciliation (Company) Total equity capital 143,487$ 146,894$ 217,130$ 217,707$ 250,277$ Total intangible assets 18,088 17,921 60,959 60,295 59,826 Tangible equity 125,399$ 128,973$ 156,171$ 157,412$ 190,451$ Tangible common equity / tangible assets reconciliation (Company) Tangible common equity 125,399 128,973 156,171 157,412 190,451 Tangible assets 1,780,958 1,737,597 2,451,622 2,631,420 2,626,962 Tangible common equity / tangible assets 7.04% 7.42% 6.37% 5.98% 7.25% Noninterest income / operating revenue reconciliation (Company) Net interest income 14,231$ 15,069$ 17,868$ 19,022$ 19,188$ Total noninterest income 8,605 7,610 9,438 11,039 9,128 Operating reveune 22,836$ 22,679$ 27,306$ 30,061$ 28,316$ Noninterest income 8,605 7,610 9,438 11,039 9,128 Noninterest income / operating revenue 37.68% 33.56% 34.56% 36.72% 32.24%