Fidelity Federal Bancorp (“Company”), announced today the completion of a $35 million private placement of 4.50% fixed-to-floating rate subordinated notes due 2031. Additionally, the Company’s savings bank subsidiary, United Fidelity Bank
(“Bank”), announced today the completion of a $25 million private placement of 8.00% non-cumulative perpetual preferred stock. The Company and Bank intend to use the capital to support the Company’s growth opportunities (including affordable housing and ongoing acquisition strategy), bank level capital ratios, and other general corporate purposes.
The subordinated notes will bear interest at 4.50% per annum for five years and then the interest rate will reset quarterly at the three-month SOFR plus 384 basis points, payable quarterly in arrears for the remaining five years. Unless redeemed earlier, the notes will mature on March 30, 2031. The Company may redeem the notes at its option beginning on March 30, 2026, and each interest date thereafter. Proceeds from the notes meet the requirements to qualify as Tier 2 regulatory capital for the Company. The offering was originally established at $20 million, but the amount was upsized to $35 million due to investor demand. Prior to marketing the notes, the Company received an A rating, and the issuance received an A- rating, from Egan-Jones Rating Service.
The Bank issued $25 million of fixed rate non-cumulative perpetual preferred stock (“Preferred”). The Preferred will have a liquidation value of $1,000 per share and a dividend rate of 8.00% per annum, payable quarterly. Beginning on March 30, 2026, or any dividend payment date subsequent, the Company may, at its option and in whole or in part, redeem the Preferred. The Preferred will qualify as regulatory Tier 1 regulatory capital for the Bank. The offering was originally established at $20 million, but the amount was upsized to $25 million due to investor demand. The Bank also received an A rating, with the issue receiving an A- rating, from Egan-Jones Rating Service.
Donald R. Neel, President and CEO of the Company and Bank, commented, “We are pleased with the high level of interest in our offering and proud that investors share in our belief of our business model. The capital raised in these offerings will allow Fidelity Federal Bancorp and United Fidelity Bank to continue to meet the needs of the markets we serve, including our efforts to help provide much needed affordable housing, and position the Company and Bank for continued profitable growth.”
Piper Sandler & Co. acted as sole placement agent and was represented by Vedder Price P.C. The law firm of SmithAmundsen LLC served as legal counsel to the Company and Bank in the offerings.