Subordinated Notes: Fixed to Floating

Considered risky by some, NexBank Capital, Inc., is taking its chances in the lending arena. Utilizing channels of institutions and investors of at least $1 million in liquid assets, NexBank Capital, Inc., has provided access to $54 million in subordinated notes. This type of note is considered dicey because if the borrower defaults on the note, NexBank Capital, Inc. would be among the last to be paid. The use of these fixed-to-floating notes since 2016, has produced $283 million of debt and equity. On September 19, 2017, NexBank Capital, Inc. concluded these notes were not to be issued anymore and therefore discontinued their availability.

According to BankNews, reaching maturation on September 30, 2027, therefore, these fixed-to-floating notes cannot be redeemed within a five year period without subject to penalty. The initial rate, fixed, is 6.375% and once the prescribed period has expired, the terms of the note transitions to a floating rate. The basis for the floating rate is the prevailing three-month LIBOR (London-Inter Bank Offered Rate) of 458.5 points. LIBOR is an averaged rate that banks use to lend monies. Although these notes are considered to be stable and of “investment grade”, they are absent of protection under security laws in the United States and therefore not available in the states.

Established in 1922, NexBank is listed at the 10th largest bank in Texas, fourth largest in Dallas offers banking services through Commercial, Mortgage, and Institutional avenues. NexBank has the capability to provide specialized services to consumers. NexBank prides itself in as a leader in the community by providing loans to Texan Veterans and making available funds to low to moderate income families. Not stopping with loans to their community members, NexBank has helped to support the need for literacy programs in the local school systems. Their continued support of learning has not gone unnoticed, they received the 2018 Financial Capability Innovation Award presented by EVERFI, Inc. To know more about Nexbank, visit