Tectonic Financial, Inc. (Nasdaq: TECTP) has completed a private placement of $40 million in aggregate principal amount of 7.25% Fixed-to-Floating Rate Subordinated Notes due 2036. The Notes initially carry a fixed interest rate of 7.25% until February 15, 2031, after which the rate will reset quarterly to an annual floating rate equal to the Three-Month Term SOFR plus 368 basis points until maturity on February 15, 2036. The company plans to use the net proceeds for general corporate purposes, including the redemption of existing indebtedness of T Bancshares, Inc. and its 9.00% Fixed-to-Floating Rate Series B Non-Cumulative Perpetual Preferred Stock. The Notes are intended to qualify as Tier 2 capital for regulatory capital purposes and are redeemable by the company, in whole or in part, on or after February 15, 2031.

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