Burke & Herbert prices $100M subordinated notes to refinance older debt
What's the deal? Burke & Herbert Financial Services Corp.Dealroom has a profile for this one. Try Dealroom → (Nasdaq: BHRB), the holding company for Burke & Herbert Bank & Trust CompanyDealroom has a profile for this one. Try Dealroom →, has priced a $100 million public offering of 7.00% Fixed-to-Floating Rate Subordinated Notes due 2036. The notes priced at 100% of principal and are set to close on September 30, 2026. Keefe, Bruyette & Woods, A Stifel CompanyDealroom has a profile for this one. Try Dealroom →, acted as sole book-running manager.
How it works: Interest accrues at 7.00% per year through October 2031, then switches to a floating rate tied to Three-Month Term SOFR plus 222 basis points until maturity in 2036. The notes are intended to qualify as Tier 2 capital for regulatory purposes.
What's the money for? The Alexandria, Virginia-based company plans to use the net proceeds, plus cash on hand, to refinance a stack of older, higher-cost debt. That includes $4.5 million of 6.875% notes due 2028, $18.1 million of notes due July 2030, and $20 million of notes due October 2030.
It may also repay part or all of $75 million in 3.25% notes due 2031 and redeem up to $15 million of 2021 preferred stock. Remaining funds go toward general corporate purposes, including capital to support the bank's growth.
Why now? The move consolidates several subordinated notes carrying floating spreads as wide as 590 basis points over SOFR into a single instrument, while extending maturities to 2036. The company can redeem the new notes at par starting October 2031.
The signal: The raise ranks in roughly the 11th percentile by size among tracked deals — a modest sum reflecting a routine balance-sheet exercise rather than a growth push. For a regional bank, refinancing costlier debt into fresh Tier 2 capital is a defensive play to shore up regulatory footing and lower interest expense over time.
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