OptimumBank Holdings Issues $35M 7.50% Subordinated Notes

What Happened
OptimumBank Holdings, Inc. (OPHC) announced on August 19, 2026 that it entered into a Subordinated Note Purchase Agreement and sold $35.0 million aggregate principal of 7.50% Fixed-to-Floating Rate Subordinated Notes due 2036 in a private placement to institutional accredited investors. The Notes were issued at par and are unsecured, subordinated obligations of the company, governed by an Indenture with UMB Bank, N.A. as trustee. The company also entered into a Registration Rights Agreement to enable a future exchange for registered notes.

Key Details

• Amount: $35.0 million principal issued at 100% of face amount (par).
• Interest: Fixed 7.50% per year from Aug 19, 2026 through (but excluding) Sept 1, 2031; thereafter quarterly resets to three‑month term SOFR + 340 basis points (subject to fallback).
• Maturity & redemption: Stated maturity Sept 1, 2036; company may redeem (in whole or part) on/after Sept 1, 2031 and in limited earlier circumstances; holders have no put rights.
• Capital & ranking: Notes are unsecured and subordinate to the company’s senior debt and are intended to qualify as Tier 2 regulatory capital.
• Placement & registration: Sold in a private placement relying on Section 4(a)(2) and Rule 506(b) of Reg D; a Registration Rights Agreement requires the company to pursue an exchange offer to register the notes (failure to comply can trigger additional interest payments).

Why It Matters
This transaction provides OptimumBank with $35M of liability financing for general corporate purposes and strengthens its regulatory capital base by adding intended Tier 2 capital. For investors, the notes increase the company’s fixed interest expense (7.50% until 2031) and then expose OPHC to a floating-rate cost tied to SOFR thereafter. Because the notes are subordinated and unsecured, they rank below senior creditors on repayment priority, which is important for credit risk assessment. The private placement structure and registration rights mean the securities are initially illiquid for most retail investors until an exchange registration is completed.