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Note 9 - Long-term Debt

9 Months Ended

Sep. 30, 2020

NOTE 9 - LONG-TERM DEBT

In March 2016, the Company issued $50 million of 6.5% fixed to floating rate subordinated debentures, due March 31, 2026. The interest rate is fixed through March 31, 2021 and floats at the 3 month LIBOR plus 516 basis points thereafter. The Company can redeem these subordinated debentures beginning March 31, 2021. The subordinated debentures are considered Tier 2 capital at the Company. The Company contributed $35 million to the Bank as Tier 1 capital.

In November 2018, the Company issued $55 million of 6.18% fixed to floating rate subordinated debentures, due December 1, 2028. The interest rate is fixed through December 1, 2023 and floats at 3 month LIBOR plus 315 basis points thereafter. The Company can redeem these subordinated debentures beginning December 1, 2023. The subordinated debentures are considered Tier 2 capital at the Company. The Company contributed $25 million to the Bank as Tier 1 capital.

At September 30, 2020 and December 31, 2019, long-term debt was as follows:

	*September 30,*		*December 31,*
*(dollars in thousands)*	*2020*		*2019*
Principal	$	105,000	$	105,000
Unamortized debt issuance costs	$	695	$	951

The following table presents interest and amortization expense the Company incurred for the three and nine months ended September 30, 2020 and 2019:

	*For the Three Months Ended September 30,*				*For the Nine Months Ended September 30,*
*(dollars in thousands)*	*2020*		*2019*		*2020*		*2019*
Interest Expense:
Interest	$	1,662	$	1,662	$	4,987	$	4,987
Amortization		85		85		256		256

In July 2017, British banking regulators announced plans to eliminate the LIBOR rate by the end of 2021, before this long-term debt and subordinated debentures mature. For these subordinated debentures, there are provisions for amendments to establish a new interest rate benchmark.