Optimum Bank plans to raise $7 million, expand

OptimumBank Holdings (Nasdaq SmallCap: OPHC) is preparing to expand, and it hopes to hind its growth with a popular form of capital that will not dilute shareholders' earnings.

The Plantation-based company, the parent of OptimumBank, plans to raise $7 million this fall by participating in a Wall Street-sponsored pool of trust-preferred securities.

Since 1996, the Federal Reserve has permitted bank holding companies that meet standards for profits and capital to issue those securities.

OptimumBank will seek Fed approval this summer, said Richard Browdy, president of the bank and its holding company.

Banks treat trust-preferred securities as debt on their balance sheets. But they count the securities as core capital in their capital-to-assets ratios.

Thus, the Fed permits eligible banks to raise money to finance growth without having to issue new private or public stock.

OptimumBank's...