Monday, July 9, 2018

Advia Issued $5 Million in Subordinated Debt in Q2 2017

During the second quarter of 2017, Advia Credit Union (Parchment, MI) issued $5 million in subordinated debt with a 10 year term.

Advia Credit Union has a low-income designation, which allowed the credit union to raise secondary capital.

On September 1, 2017, Advia Credit Union acquired Peoples Bank (Elkhorn, WI).

While the issuance of subordinated debt and the merger are closely timed, this appears to be a coincidence.

According to Jeff Fielder, EVP of Finance at Advia Credit Union, "[t]he issuance of this debt was not a condition of the acquisition of Peoples Bank. However, our management team and board saw value in raising capital to reduce the minor dilution that would occur with the acquisition."

As of March 2018, the issuance of subordinated debt boosted the $1.7 billion credit union's net worth by almost 30 basis points.

In addition, Fielder noted that Advia saw value in diversifying its capital base, which would position the credit union for future growth.

Fielder further commented that the credit union, at this time, does not plan to issue any additional subordinated debt.

Going forward, more large, low-income designated credit unions will issue subordinated debt.

1 comment:

  1. That is $5 million of capital at risk before the NCUSIF would have to pay out one penny and further protects the US taxpayers who ultimately back up all insured savings at credit unions AND banks.



The content is provided for educational purposes only, with the understanding that neither the authors, contributors, nor the publishers of this site are engaged in rendering legal, accounting or other expert or professional services. If legal or other expert assistance is required, the services of a competent professional should be sought.

Comments appearing in response to articles appearing on this site do not necessarily reflect the views of the ABA. ABA makes no representations regarding the truth or accuracy of commentary or opinions that may be posted in response to the articles that appear on this website.

The inclusion herein of any link to a website, either in the text of an article or in a comment, does not denote any approval, sponsorship, or endorsement by the ABA, and ABA is not responsible for the content or opinions expressed on those linked websites or related commentary. This content is not licensed to third parties sites and is not affiliated with any third party site. Any reference to the author or this content on any third party site on the Internet is not authorized by the ABA.

It is the policy of the American Bankers Association to comply fully with all antitrust laws. Certain discussions should be considered off-limits, including those that contain competitively sensitive data such as price and cost information, or statements that could be construed as reflecting an attempt or desire to control or influence a particular market or markets. Future pricing or other prospective competitive information should never be shared.