Sturgis Bancorp, Inc. Announces Completion of Subordinated Notes Offering

STURGIS, MI / ACCESSWIRE / December 30, 2020 / Sturgis Bancorp, Inc. (OTCQX:STBI) (the "Company"), the parent holding company of Sturgis Bank & Trust Company (the "Bank"), today announced the completion of a private placement of $15 million aggregate principal amount of its 5.0% fixed-to-floating rate subordinated notes due December 30, 2030 (the "Notes") to various accredited investors (the "Offering"). The price for the Notes was 100% of the principal amount of the Notes. The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The Company intends to use the net proceeds from the Offering for general corporate purposes, including without limitation financing organic growth and investments in the Bank and its other subsidiaries for regulatory capital purposes.

Interest on the Notes will accrue at a rate equal to (i) 5.0% per annum from the original issue date to, but excluding, December 30, 2025, payable semi-annually in arrears, and (ii) a floating rate per annum equal to a benchmark rate, which is expected to be the Three-Month Term SOFR (as defined in the Notes), plus a spread of 473 basis points from and including December 30, 2025 until maturity, payable quarterly in arrears. Beginning on December 30, 2025 through maturity, the Notes may be redeemed, at the Company's option, on any scheduled interest payment date. Any redemption will be at a redemption price equal to 100% of the principal amount of Notes being redeemed, plus accrued and unpaid interest.

Eric Eishen, President and Chief Executive Officer of Sturgis Bancorp, Inc. and the Bank, stated, "We are pleased to have successfully completed the offering of our subordinated notes on terms we believe are attractive. We intend to downstream a significant portion of this capital to the Bank to support important strategic growth initiatives and enhance our service to our local customers, markets and communities. This offering has allowed us to cost-effectively increase our capital levels without diluting our existing shareholders."

Boenning & Scattergood, Inc. served as financial advisor to the Company and acted as the sole placement agent for the Offering, and was represented by Howard & Howard Attorneys PLLC as legal counsel. Warner Norcross + Judd LLP served as the Company's legal counsel in the Offering.

About Sturgis Bancorp, Inc. and Sturgis Bank & Trust Company

Sturgis Bancorp, Inc. is the holding company for the Bank, and the Bank's subsidiaries: Oakleaf Financial Services, Inc., Oak Mortgage, LLC, Oak Insurance Services, LLC, and Oak Title Services, LLC. The Bank provides a full array of trust, commercial and consumer banking services from banking centers in Sturgis, Bangor, Bronson, Centreville, Climax, Colon, Portage, South Haven, St. Joseph, Three Rivers and White Pigeon, Michigan. Oakleaf Financial Services offers a complete range of investment and financial-advisory services. Oak Mortgage offers residential mortgages in all markets of the Bank. Oak Insurance Services offers various competitive commercial and consumer insurance products. Oak Title Services offers commercial and consumer title insurance.

Forward-Looking Statements

This Press Release contains forward-looking statements that are based on management's beliefs, assumptions, current expectations, estimates and projections about the financial services industry, the economy, the Company and the Bank. Forward-looking statements are identifiable by words or phrases such as "believe," "cost-effective," "enhance," "intend" and variations of such words and similar expressions. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. Actual results and outcomes may materially differ from what may be expressed or forecasted in such forward-looking statements. The Company undertakes no obligation to update, amend or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Contacts

Eric Eishen, President and Chief Executive Officer
Brian Hoggatt, Chief Financial Officer
(269) 651-9345

SOURCE: Sturgis Bancorp, Inc.