Ballston Spa Bancorp, Inc. Completes \$26 Million Subordinated Debt Offering to Facilitate NBC Bancorp Merger

Key Highlights for Investors

• Subordinated Debt Raise: Ballston Spa Bancorp, Inc. (OTCQX: BSPA), the holding company for Ballston Spa National Bank (“BSNB”), has successfully completed a \$26 million offering of subordinated notes through a private placement to qualified institutional buyers and accredited investors.
• Purpose of the Offering: The net proceeds from this debt issuance will primarily support the previously announced merger with NBC Bancorp, Inc. (OTCID: NCXS), the holding company for The National Bank of Coxsackie (“NBC”). The funds are intended to provide requisite capital for the combined bank and for general corporate purposes, bolstering the ongoing operations post-merger.
• Terms of the Notes:
  • Maturity date: April 1, 2036.
  • Fixed interest rate of 7.375% through April 1, 2031.
  • Floating rate of 90-day average SOFR plus 378 basis points thereafter.
  • Redeemable in whole or in part on or after April 1, 2031, or at any time in whole upon certain regulatory events.
  • Structured to qualify as Tier 2 capital for regulatory purposes, strengthening the bank’s capital position.
  • Notes are not registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption.
• Advisors: Griffin Financial Group LLC and Brean Capital LLC acted as placement agents, with Luse Gorman, PC as legal counsel to BSNB and Stevens & Lee as legal counsel to the placement agents.

Potentially Price-Sensitive Information for Shareholders

• Capital for Merger Execution: The successful capital raise is a critical milestone towards the completion of the merger with NBC Bancorp. The transaction is expected to create a larger, stronger community bank, which could drive future growth and enhanced financial performance.
• Attractive Note Terms: The fixed interest rate of 7.375% is notable, especially in the current interest rate environment, providing predictable financing costs for the next five years before switching to a floating rate.
• Regulatory Tier 2 Capital: Structuring the notes as Tier 2 capital strengthens the regulatory capital profile of the combined entity, which may improve the bank’s flexibility and risk profile post-merger.
• Forward-Looking Risks: Investors should be aware of several risks that could affect the outcome and benefits of the merger, including customer reaction, integration challenges, realization of synergies, the interest rate environment, general economic conditions, and regulatory changes. There is no guarantee that anticipated benefits will be realized as expected or within projected timeframes.

Detailed News Analysis

Ballston Spa Bancorp, Inc. has announced the completion of a substantial \$26 million subordinated debt raise through a private placement, intended to finance its ambitious merger with NBC Bancorp, Inc. The proceeds from this offering will be a significant capital infusion, supporting both the merger process and the ongoing operations of the combined organization.

The new notes, which mature on April 1, 2036, offer investors a competitive fixed coupon of 7.375% for the first five years, transitioning to a floating rate at 90-day average SOFR plus 378 basis points. This structure provides long-term financial stability while also allowing for flexibility in a changing rate environment. Redemption options begin in 2031 or earlier if certain regulatory events occur, giving management some flexibility in capital management.

Notably, the notes are structured to qualify as Tier 2 capital, which is a key regulatory consideration. This not only strengthens the bank’s capital ratios but also positions the combined entity to meet regulatory requirements and pursue growth initiatives more aggressively.

The completion of this capital raise is a major step forward for the merger with NBC Bancorp—an event that could reshape the competitive landscape for both institutions. Shareholders should monitor the integration process and the realization of expected synergies, as these will be critical drivers of future value.

However, management has emphasized caution, highlighting several forward-looking risks. These include the potential for adverse customer or employee reactions, integration difficulties, market volatility, general economic conditions, and shifting regulatory landscapes. The company has made it clear that actual results may differ from current expectations and that no obligation exists to update forward-looking statements.

Contact Information

• Media Contact: Pamela J. Montpelier, Senior Vice President, Growth and Experience Officer, (518) 363-8634, [email protected]
• Investor Relations: James Dodd, Executive Vice President, Chief Financial Officer, (518) 363-8651, [email protected]

Disclaimer

This article contains forward-looking statements regarding Ballston Spa Bancorp, Inc. and NBC Bancorp, Inc. Actual results may differ materially due to various risks and uncertainties. Investors are advised to conduct their own due diligence and consult with their financial advisors before making investment decisions. This is not an offer to sell or a solicitation of an offer to buy any securities.

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