Capitalizing on Subordinated Debt Offering to Raise Capital for Banking Institutions

On September 29th, NexBank announced that it had completed a $54 million deal with high net worth investors and wealthy institutions. The deal involved the private placement of the banks’ fixed-to-floating rate subordinated notes. Proceeds coming from the investment are intended to service activities in the general corporate section of the institution. The Bank has raised over $283 million of debt and equity in two years. In the deal, the notes remain non-callable for the next five years. They are expected to mature on September 30th, 2027. In the first five years, the notes will grow at an interest rate of 6.375 percent. Later, they will grow at a floating rate that is dependent on a spread above the three month LIBOR of 458.5 points.

They have been assigned a BBB rating. They qualify as a Tier 2 capital and have a stable outlook from Kroll Bond Rating Agency. However, they aren’t registered under the Securities Act. Therefore, they cannot be offered or traded in the United States.

NexBank assets are worth over $7.6 billion. It provides commercial banking, mortgage banking, and a wide range of institutional services. They serve large corporations and real estate developers. While at it, they use the expertise of the management teams who are equipped with the skills necessary to serve the customers. Led by its chairman, James Dondero, the bank emphasizes on providing customized services to their customers. Much of the institution’s success is attributed to the directors’ leadership experience and their commitment to delivering excellent services to their customers. As a result, they register an increased number of customers that consequently, leads to an increase in profits.

NexBank has continued to offer its services to families and individuals in Texas. They have developed several financial strategies that create a banking experience that’s unrivalled. Nexbank analyzes their customers’ financial positions and develops effective strategies that lead to proper management of their wealth. Deposit and cash management services are customized according to the client’s specifications. On the other hand, they have a special section specifically meant for wealth management. Among other services offered include investment banking, real estate advisory, and treasury management among many others.

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