First Keystone Corp Issues $32.5M Subordinated Notes

What Happened First Keystone Corporation (FKYS) announced on Oct 1, 2026 (reflecting agreements dated Sept 30, 2026) that it sold $32,500,000 of 7.50% fixed-to-floating rate subordinated notes in a private placement to institutional accredited investors. The notes were issued at par and Performance Trust Capital Partners, LLC served as placement agent. The company intends to use the net proceeds for general corporate purposes and expects the notes to qualify at the holding company level as Tier 2 capital under Federal Reserve guidelines.

Key Details

• Aggregate principal: $32,500,000; issued at 100% of face amount.
• Interest: 7.50% fixed annually through (but excluding) Sept 30, 2031; thereafter floating (expected Three‑Month Term SOFR + 277 basis points).
• Interest payments: semi‑annual during fixed period; quarterly during floating period.
• Maturity: Sept 30, 2036. Notes are unsecured, subordinated, rank junior to senior debt, and are generally not redeemable before Sept 30, 2031.
• Sale structure: private placement relying on Section 4(a)(2) and Rule 506(b) exemptions; Purchase Agreements contain customary reps and covenants.

Why It Matters This issuance raises long‑term capital and is intended to strengthen First Keystone’s holding‑company regulatory capital (Tier 2), which can support growth, lending capacity, or balance‑sheet flexibility. Investors should note the fixed 7.50% coupon for the first five years (a material interest expense) and the switch to a SOFR‑based floating rate thereafter, as that will affect future interest costs and earnings. Because the notes are subordinated and unsecured, they carry lower repayment priority than senior debt in a default.