Collateralized Debt Obligations Provide a New Option to Raise Capital
It has become tougher than ever for community banks to raise capital. Collateralized Debt Obligations (“CDO’s”) are a new option that would allow community and regional banks to work together to raise capital at a low cost. There appears to be significant demand in terms of investors, and investment firms just need to identify a group of interested, smaller privately held institutions who are looking to raise capital. Although similar, these CDO’s are different from trust-preferred securities that can no longer be converted into marketable securities due to the Dodd-Frank Act.
For more information see the attached article entitled “New Ways to Raise Capital for Your Bank” by Dave Lindorff of the American Banker or contact Kevin Dabrieo, member of Marcum’s Financial Institutions Services Group.