株探米国株
英語
エドガーで原本を確認する
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2025

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to _________

 

Commission File Number: 001-42447

 

OPTIMUMBANK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Florida   55-0865043

(State or other jurisdiction of

incorporation or organization)

  

(IRS Employer

Identification No.)

 

2929 East Commercial Boulevard, Fort Lauderdale, FL 33308

(Address of principal executive offices, Zip Code)

 

954-900-2800

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $.01 Par Value   OPHC   NYSE American

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer ☐   Accelerated filer ☐
Non-accelerated filer ☒   Smaller reporting company ☒
    Emerging growth company ☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 11,533,943 shares of common stock, $0.01 par value, issued and outstanding as of November 10, 2025.

 

 

 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

INDEX

 

    Page
     
PART I. FINANCIAL INFORMATION   1
     
Item 1. Financial Statements   1
     
Condensed Consolidated Balance Sheets — September 30, 2025 (unaudited) and December 31, 2024 (audited)   1
     
Condensed Consolidated Statements of Earnings — Three and Nine Months ended September 30, 2025 and 2024 (unaudited)   2
     
Condensed Consolidated Statements of Comprehensive Income — Three and Nine Months ended September 30, 2025 and 2024 (unaudited)   3
     
Condensed Consolidated Statements of Stockholders’ Equity — Three and Nine Months ended September 30, 2025 and 2024 (unaudited)   4
     
Condensed Consolidated Statements of Cash Flows — Nine Months ended September 30, 2025 and 2024 (unaudited)   6
     
Notes to Condensed Consolidated Financial Statements (unaudited)   7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations   21
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk   26
     
Item 4. Controls and Procedures   26
     
PART II. OTHER INFORMATION   27
     
Item 1. Legal Proceedings   27
     
Item 1A. Risk Factors   27
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   27
     
Item 3. Defaults Upon Senior Securities   27
     
Item 4. Mine Safety Disclosures   27
     
Item 5. Other Information   27
     
Item 6. Exhibits   27
     
SIGNATURES   28

 

i

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

 

    September 30,     December 31,  
    2025     2024  
    (Unaudited)     (Audited)  
Assets:                
Cash and due from banks   $ 9,271     $ 13,982  
Interest-bearing deposits with banks     225,815       79,648  
Total cash and cash equivalents     235,086       93,630  
Debt securities available for sale     22,926       22,773  
Debt securities held-to-maturity (fair value of $221 and $247)     246       281  
Loans, net of allowance for credit losses of $10,018 and $8,660     802,812       794,985  
Federal Home Loan Bank stock     658       2,929  
Premises and equipment, net     2,308       2,062  
Right-of-use lease assets     2,725       2,679  
Accrued interest receivable     3,171       3,348  
Deferred tax asset     3,238       3,001  
Other assets     9,873       7,245  
Total assets   $ 1,083,043     $ 932,933  
                 
Liabilities and Stockholders’ Equity:                
Liabilities:                
Noninterest-bearing demand deposits   $ 313,973     $ 211,900  
Savings, NOW and money-market deposits     309,087       278,355  
Time deposits     336,427       281,940  
Total deposits     959,487       772,195  
                 
Federal Home Loan Bank advances     -       50,000  
Operating lease liabilities     2,846       2,774  
Other liabilities     3,822       4,780  
Total liabilities     966,155       829,749  
                 
Commitments and contingencies (Notes 8 and 11)     -       -  
Stockholders’ equity:                
Preferred stock, no par value 6,000,000 shares authorized:                
Series B Convertible Preferred, no par value, 1,520 shares authorized, 1,360 shares issued and outstanding     -       -  
Series C Convertible Preferred, no par value, 4,000,000 shares authorized, 525,641 shares issued and outstanding     -       -  
Common stock, $.01 par value; 30,000,000 shares authorized, 11,883,943 and 11,636,092 shares issued and outstanding     119       116  
Additional paid-in capital     112,574       111,485  
Retained earnings (accumulated deficit)     8,948       (2,847 )
Accumulated other comprehensive loss     (4,753 )     (5,570 )
Total stockholders’ equity     116,888       103,184  
Total liabilities and stockholders’ equity   $ 1,083,043     $ 932,933  

 

See accompanying notes to condensed consolidated financial statements.

 

1

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Earnings (Unaudited)

(Dollars in thousands, except per share amounts)

 

    2025     2024     2025     2024  
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2025     2024     2025     2024  
Interest income:                                
Loans   $ 14,082     $ 13,588     $ 41,709     $ 38,372  
Debt securities     153       163       471       498  
Other     2,086       1,583       4,736       5,116  
Total interest income     16,321       15,334       46,916       43,986  
                                 
Interest expense:                                
Deposits     5,273       5,962       15,873       16,959  
Borrowings     -       410       327       1,574  
Total interest expense     5,273       6,372       16,200       18,533  
                                 
Net interest income     11,048       8,962       30,716       25,453  
                                 
Credit loss expense     763       357       1,638       1,610  
Net interest income after credit loss expense     10,285       8,605       29,078       23,843  
                                 
Noninterest income:                                
Service charges and fees     1,252       990       3,389       2,822  
Other     730       125       1,658       733  
Total noninterest income     1,982       1,115       5,047       3,555  
                                 
Noninterest expenses:                                
Salaries and employee benefits     4,004       3,078       11,123       8,958  
Professional fees     276       266       798       699  
Occupancy and equipment     327       234       903       642  
Data processing     788       574       1,946       1,702  
Regulatory assessment     126       241       526       593  
Other     1,083       892       3,115       2,484  
Total noninterest expenses     6,604       5,285       18,411       15,078  
                                 
Net earnings before income taxes     5,663       4,435       15,714       12,320  
                                 
Income taxes     1,340       1,133       3,919       3,147  
Net earnings   $ 4,323     $ 3,302     $ 11,795     $ 9,173  
                                 
Net earnings per share - Basic   $ 0.37     $ 0.34     $ 1.00     $ 1.02  
Net earnings per share - Diluted(1)   $ 0.18     $ 0.15     $ 0.50     $ 0.45  

 

(1) Earnings per share amounts for all periods presented have been restated to reflect the impact of the amendment to the rights of the Series B Preferred shares, as described in Note 10. This amendment resulted in a change in the calculation of diluted earnings per share, applied retrospectively to ensure comparability.

 

See accompanying notes to condensed consolidated financial statements.

 

2

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)

 

    2025     2024     2025     2024  
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2025     2024     2025     2024  
                         
Net earnings   $ 4,323     $ 3,302     $ 11,795     $ 9,173  
Other comprehensive income:                                
Change in unrealized loss on debt securities:                                
Unrealized gain arising during the period     896       1,298       1,119       1,096  
Amortization of unrealized loss on debt securities transferred to held-to-maturity     1       -       -       1  
Other comprehensive income before income taxes     897       1,298       1,119       1,097  
Deferred income tax expense     (245 )     (331 )     (302 )     (266 )
Total other comprehensive income     652       967       817       831  
Comprehensive income   $ 4,975     $ 4,269     $ 12,612     $ 10,004  

 

See accompanying notes to condensed consolidated financial statements.

 

3

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

Three and Nine Months Ended September 30, 2025 and 2024

(Dollars in thousands, except share amounts)

 

    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Earnings     Loss     Equity  
    Three months ended September 30,2025  
    Preferred Stock                 Additional           Accumulated Other        
    Series B     Series C     Common Stock     Paid-In     Retained     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Earnings     Loss     Equity  
                                                             
Balance at June 30, 2025     1,360     $           -       525,641     $        -       11,751,082     $     118     $ 112,010     $ 4,625     $ (5,405 )   $ 111,348  
Offering costs related to common stock ($14)     -       -       -       -       -       -       (14 )     -       -       (14 )
Stock-based Compensation     -       -       -       -       132,861       1       578       -       -       579  
Net change in unrealized loss on debt securities available for sale     -       -       -       -       -       -       -       -       651       651  
Amortization of unrealized loss on debt securities transferred to held-to-maturity     -       -       -       -       -       -       -       -       1       1  
Net earnings     -       -       -       -       -       -       -       4,323       -       4,323  
Three months ended September 30, 2025     -       -       -       -       132,861       1       564       4,323       652       5,540  
Balance at September 30, 2025     1,360     $ -       525,641     $ -       11,883,943     $ 119     $ 112,574     $ 8,948     $ (4,753 )   $ 116,888  

 

    Nine months ended September 30, 2025  
    Preferred Stock                 Additional           Accumulated Other        
    Series B     Series C     Common Stock     Paid-In     Retained     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Earnings     Loss     Equity  
Balance at December 31, 2024     1,360     $         -       525,641     $           -       11,636,092     $     116     $ 111,485     $ (2,847 )   $ (5,570 )   $ 103,184  
Proceeds from sale of common stock (net of offering costs of $35)     -       -       -       -       52,819       1       216       -       -       217  
Stock-based Compensation     -       -       -       -       195,032       2       873       -       -       875  
Net change in unrealized loss on debt securities available for sale     -       -       -       -       -       -       -       -       817       817  
Net earnings     -       -       -       -       -       -       -       11,795       -       11,795  
Nine months ended September 30, 2025     -       -       -       -       247,851       3       1,089       11,795       817       13,704  
Balance at September 30, 2025     1,360     $ -       525,641     $ -       11,883,943     $ 119     $ 112,574     $ 8,948     $ (4,753 )   $ 116,888  

 

See accompanying notes to condensed consolidated financial statements.

 

4

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (Continued)

Three and Nine Months Ended September 30, 2025 and 2024

(Dollars in thousands, except share amounts)

 

    Three months ended September 30, 2024  
    Preferred Stock                 Additional           Accumulated Other        
    Series B     Series C     Common Stock     Paid-In     (Accumulated     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit)     Loss     Equity  
                                                             
Balance at June 30, 2024     1,360     $         -       525,641     $         -       9,677,431     $      96     $ 102,424     $ (10,100 )   $ (5,451 )   $ 86,969  
Proceeds from sale of common stock (net of offering costs of $79)     -       -       -       -       329,529       3       1,454       -       -       1,457  
Net change in unrealized loss on debt securities available for sale     -       -       -       -       -       -       -       -       967       967  
Net earnings     -       -       -       -       -       -       -       3,302       -       3,302  
Three months ended September 30, 2024     -       -       -       -       329,529       3       1,454       3,302       967       5,726  
Balance at September 30, 2024     1,360     $ -       525,641     $ -       10,006,960     $ 99     $ 103,878     $ (6,798 )   $ (4,484 )   $ 92,695  

 

    Nine months ended September 30, 2024  
    Preferred Stock                 Additional           Accumulated Other        
    Series B     Series C     Common Stock     Paid-In     (Accumulated     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit)     Loss     Equity  
                                                             
Balance at December 31, 2023     1,360     $         -       -     $        -       7,250,219     $     72     $ 91,221     $ (15,971 )   $ (5,315 )   $ 70,007  
Proceeds from sale of preferred stock (net of offering costs of $118)     -       -       525,641       -       -       -       1,932       -       -       1,932  
Proceeds from sale of common stock (net of offering costs of $418)     -       -       -       -       2,641,081       26       10,234       -       -       10,260  
Stock-based Compensation     -       -       -       -       115,660       1       491       -       -       492  
Net change in unrealized loss on debt securities available for sale     -       -       -       -       -       -       -       -       830       830  
Amortization of unrealized loss on debt securities transferred to held-to-maturity     -       -       -       -       -       -       -       -       1       1  
Net earnings     -       -       -       -       -       -       -       9,173       -       9,173  
Nine months ended September 30, 2024     -       -       525,641       -       2,756,741       27       12,657       9,173       831       22,688  
Balance at September 30, 2024     1,360     $ -       525,641     $ -       10,006,960     $ 99     $ 103,878     $ (6,798 )   $ (4,484 )   $ 92,695  

 

See accompanying notes to condensed consolidated financial statements.

 

5

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

    2025     2024  
    Nine Months Ended  
    September 30,  
    2025     2024  
Cash flows from operating activities:                
Net earnings   $ 11,795     $ 9,173  
Adjustments to reconcile net earnings to net cash provided by operating activities:                
Credit loss expense     1,638       1,610  
Depreciation and amortization     341       207  
Deferred income tax benefit     (539 )     (151 )
Net accretion of fees, premiums and discounts     (26 )     (247 )
Stock-based compensation expense     875       492  
Decrease (increase) in accrued interest receivable     177       (673 )
Amortization of right-of-use lease assets     231       211  
Net decrease in operating lease liabilities     (205 )     (192 )
Increase in other assets     (2,023 )     (1,092 )
(Decrease) increase in other liabilities     (1,057 )     310  
Net cash provided by operating activities     11,207       9,648  
                 
Cash flows from investing activities:                
Principal repayments of debt securities available for sale     874       859  
Principal repayments of debt securities held-to-maturity     35       61  
Net increase in loans     (9,853 )     (99,279 )
Purchases of premises and equipment     (587 )     (770 )
Redemption of FHLB stock     2,271       900  
Net cash used in investing activities     (7,260 )     (98,229 )
                 
Cash flows from financing activities:                
Net increase in deposits     187,292       166,925  
Net decrease in FHLB Advances     (50,000 )     (22,000 )
Net decrease in FRB Advances     -       (13,600 )
Proceeds from sale of preferred stock (net of offering costs of $118)     -       1,932  
Proceeds from sale of common stock (net of offering costs of $35 and $418)     217       10,260  
Net cash provided by financing activities     137,509       143,517  
                 
Net increase in cash and cash equivalents     141,456       54,936  
Cash and cash equivalents at beginning of the period     93,630       76,663  
Cash and cash equivalents at end of the period   $ 235,086     $ 131,599  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for:                
Interest   $ 17,072     $ 18,537  
Income taxes   $ 3,905     $ 3,147  
                 
Supplemental noncash transactions:                
Net change in unrealized loss on debt securities available for sale, net of income taxes   $ 817     $ 830  
Amortization of unrealized loss on debt securities transferred to held-to-maturity   $ -     $ 1  
Right-of-use lease assets obtained in exchange for operating lease liabilities   $ 277     $ -  
Transfers of loans to other assets   $ 605     $ -  

 

See accompanying notes to condensed consolidated financial statements.

 

6

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General. OptimumBank Holdings, Inc. (the “Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered community bank. The Company’s only business is the operation of the Bank. The Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”). The Bank offers a variety of community banking services to individual and corporate customers through its three banking offices located in Broward County and Miami-Dade County, Florida. The Bank also markets its deposit and electronic funds transfer services on a national basis to merchant cash advance providers.

 

Basis of Presentation. In the opinion of management, the accompanying condensed consolidated financial statements of the Company contain all adjustments (consisting principally of normal recurring accruals) necessary to present fairly the financial position at September 30, 2025, the results of operations for the three-month and nine-month periods ended September 30, 2025 and 2024, and cash flows for the nine-month periods ended September 30, 2025 and 2024. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three-month and nine-month periods ended September 30, 2025, are not necessarily indicative of the results to be expected for the full year of 2025.

 

Comprehensive Income. Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”) requires recognized revenue, expenses, gains and losses be included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale debt securities are reported as a separate component of the equity section of the condensed consolidated balance sheets, such items along with net earnings, are components of comprehensive income.

 

Accumulated other comprehensive loss consists of the following (Dollars in thousands):

 Schedule of Accumulated Other Comprehensive Loss

    September 30,     December 31,  
    2025     2024  
             
Unrealized loss on debt securities available for sale   $ (6,354 )   $ (7,473 )
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity     (10 )     (10 )
Income tax benefit     1,611       1,913  
Accumulated other comprehensive loss   $ (4,753 )   $ (5,570 )

 

Recently Adopted Accounting Pronouncements:

 

Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2023-09, “Income Taxes (Topic 740) Improvements to Income Tax Disclosures”. The amendments in this update address investor requests for more transparency about income tax information through improvements to annual income tax disclosures primarily related to the rate reconciliation and income taxes paid information. The amendments in this update are effective for our annual reporting period ended December 31, 2024, and are to be applied on a prospective basis. Early adoption is permitted. The Company is currently evaluating the impact on its annual disclosures.

 

Accounting Pronouncements Not Yet Adopted:

 

FASB ASU No. 2023-06, “Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative”. This ASU amends the disclosure or presentation requirements related to various subtopics in the FASB ASC. The amendments in this ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

 

FASB ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures”. This amendment requires enhanced disaggregation of certain expense categories within the income statement to provide more detailed information about the nature and function of expenses. The objective is to improve the transparency and usefulness of financial statements for users by offering greater insight into the components of operating expenses. The amendments in this update are effective for fiscal years beginning after December 15, 2026 and interim periods within annual reporting periods beginning after December 15, 2027. These changes may be applied prospectively or retroactively. Early adoption is permitted. The Company is currently evaluating the impact on its disclosures.

 

FASB ASU 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity”. This amendment determining the Accounting Acquirer in a Business Combination Involving a Variable Interest Entity. This update clarifies how to identify the accounting acquirer when a business combination involves a variable interest entity. The standard is effective prospectively for business combinations occurring on or after the adoption date. The Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

 

FASB ASU 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Capitalization and Disclosure Improvements”. This amendment provides updated guidance on the capitalization of costs related to internal-use software and expands the required disclosures. The objective is to clarify when capitalization is appropriate and to enhance the transparency of financial reporting related to internal-use software development. The amendments in this update are effective for fiscal years beginning after a date to be specified by the FASB (issued in September 2025). Adoption is not expected to have a material effect on the Company’s financial statements. The Company is evaluating the impact of this guidance; adoption is not expected to have a material effect on the Company’s consolidated financial statements.

 

(continued)

 

7

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2) Debt Securities. Debt securities have been classified according to management’s intent. The amortized cost of debt securities and fair values are as follows (Dollars in thousands):

 Schedule of Amortized Cost and Approximate Fair Values of Debt Securities

          Gross     Gross        
    Amortized     Unrealized     Unrealized     Fair  
    Cost     Gains     Losses     Value  
                         
At September 30, 2025:                                           
Available for sale:                                
SBA Pool Securities   $ 477     $ -     $ (12 )   $ 465  
Collateralized mortgage obligations     119       -       (12 )     107  
Taxable municipal securities     16,626       -       (4,126 )     12,500  
Mortgage-backed securities     12,058       -       (2,204 )     9,854  
Total   $ 29,280     $ -     $ (6,354 )   $ 22,926  
                                 
Held-to-maturity:                                
Collateralized mortgage obligations   $ 246     $ -     $ (25 )   $ 221  
Total   $ 246     $ -     $ (25 )   $ 221  
                                 
At December 31, 2024:                                
Available for sale:                                
SBA Pool Securities   $ 581     $ -     $ (14 )   $ 567  
Collateralized mortgage obligations     128       -       (17 )     111  
Taxable municipal securities     16,654       -       (4,740 )     11,914  
Mortgage-backed securities     12,883       -       (2,702 )     10,181  
Total   $ 30,246     $ -     $ (7,473 )   $ 22,773  
                                 
Held-to-maturity:                                
Collateralized mortgage obligations   $ 281     $ -     $ (34 )   $ 247  
Total   $ 281     $ -     $ (34 )   $ 247  

 

As of September 30, 2025, debt securities with a fair value of $1.7 million were pledged as collateral to the Federal Reserve Bank. There were no sales of debt securities during the nine-month periods ended September 30, 2025, and 2024.

 

Debt securities available for sale with gross unrealized losses, aggregated by investment category and length of time that individual debt securities have been in a continuous loss position, is as follows (Dollars in thousands):

 Schedule of Debt Securities Available for Sale with Gross Unrealized Losses, by Investment Category

    Over Twelve Months     Less Than Twelve Months  
    Gross           Gross        
    Unrealized     Fair     Unrealized     Fair  
    Losses     Value     Losses     Value  
At September 30, 2025:                           
Available for Sale:                                                    
SBA Pool Securities   $ (12 )   $ 465     $ -     $ -  
Collateralized mortgage obligation     (12 )     107       -       -  
Taxable municipal securities     (4,126 )     12,500       -       -  
Mortgage-backed securities     (2,204 )     9,854       -       -  
Total   $ (6,354 )   $ 22,926     $ -     $ -  

 

(continued)

 

8

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2) Debt Securities, Continued.

 

    Over Twelve Months     Less Than Twelve Months  
    Gross           Gross        
    Unrealized     Fair     Unrealized     Fair  
    Losses     Value     Losses     Value  
                         
At December 31, 2024:                                
Available for Sale:                                                   
SBA Pool Securities   $ (14 )   $ 567     $ -     $ -  
Collateralized mortgage obligation     (17 )     111       -       -  
Taxable municipal securities     (4,740 )     11,914       -       -  
Mortgage-backed securities     (2,702 )     10,181       -       -  
Total   $ (7,473 )   $ 22,773     $ -     $ -  

 

At September 30, 2025 and December 31, 2024, the unrealized losses on forty investment debt securities, respectively, were caused by interest-rate changes.

 

The Company performed an analysis that determined that the mortgage-backed securities, collateralized mortgage obligations, and U.S. government securities, have a zero expected credit loss as they have the full faith and credit backing of the U.S. government or one of its agencies. Municipal bonds that do not have a zero expected credit loss are evaluated at least quarterly to determine whether there is a credit loss associated with a decline in fair value. At September 30, 2025 and December 31, 2024 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of September 30, 2025 and December 31, 2024 continue to perform as scheduled and the Company does not believe that there is a credit loss or that credit loss expense is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. The Company does not currently intend to sell the investments within the portfolio, and it is not more-likely-than-not that a sale will be required.

 

Management continues to monitor all of our investments with a high degree of scrutiny. There can be no assurance that in a future period, conditions may exist at that time indicating that some or all of the Company’s securities may be sold that would require a charge to earnings as credit loss expense in such period.

 

(3) Loans. The segments of loans are as follows (Dollars in thousands):

 

 Schedule of Components of Loans

    September 30,     December 31,  
    2025     2024  
             
Residential real estate   $ 66,723     $ 74,064  
Multi-family real estate     67,435       64,001  
Commercial real estate     524,865       485,671  
Land and construction     43,364       77,295  
Commercial     45,604       52,810  
Consumer     65,731       50,399  
Total loans     813,722       804,240  
                 
Deduct:                
Net deferred loan fees and costs     (892 )     (595 )
Allowance for credit losses     (10,018 )     (8,660 )
                 
Loans, net   $ 802,812     $ 794,985  

 

(continued)

 

9

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

An analysis of the change in the allowance for credit losses follows (Dollars in thousands):

 Schedule of Changes in Allowance for Loan Losses

    Residential Real
Estate		     Multi-Family
Real Estate		     Commercial Real Estate     Land and
Construction		     Commercial     Consumer     Total  
                                           
Three Months Ended September 30, 2025:                                                                     
Beginning balance (June 30, 2025)   $ 1,192     $ 758     $ 2,885     $ 1,710     $ 2,589     $ 204     $ 9,338  
Credit loss expense (reversal)     42       30       1,335       (537 )     (240 )     9       639  
Charge-offs     -       -       -       -       -       (129 )     (129 )
Recoveries     -       -       -       -       -       170       170  
Ending balance (September 30, 2025)   $ 1,234     $ 788     $ 4,220     $ 1,173     $ 2,349     $ 254     $ 10,018  
                                                         
Three Months Ended September 30, 2024:                                                        
Beginning balance (June 30, 2024)   $ 970     $ 712     $ 4,303     $ 1,677     $ 134     $ 412     $ 8,208  
Credit loss (reversal) expense     265       114       (803 )     605       47       181       409  
Charge-offs     -       -       -       -       -       (366 )     (366 )
Recoveries     -       -       -       -       -       86       86  
Ending balance (September 30, 2024)   $ 1,235     $ 826     $ 3,500     $ 2,282     $ 181     $ 313     $ 8,337  

 

    Residential Real
Estate		    

Multi-Family
Real

Estate

    

Commercial
Real

Estate

     Land and
Construction		     Commercial     Consumer     Total  
Nine Months Ended September 30, 2025:                                                        
Beginning balance (December 31, 2024)   $ 1,114     $ 786     $ 2,705     $ 2,015     $ 1,675     $ 365     $ 8,660  
Credit loss expense (reversal)     120       2       1,515       (842 )     674       70       1,539  
Charge-offs     -       -       -       -       -       (526 )     (526 )
Recoveries     -       -       -       -       -       345       345  
Ending balance (September 30, 2025)   $ 1,234     $ 788     $ 4,220     $ 1,173     $ 2,349     $ 254     $ 10,018  
                                                         
Nine Months Ended September 30, 2024:                                                        
Beginning balance (December 31, 2023)   $ 1,020     $ 1,041     $ 3,793     $ 1,019     $ 281     $ 529     $ 7,683  
Credit loss (reversal) expense     215       (215 )     (293 )     1,263       (83 )     916       1,803  
Charge-offs     -       -       -       -       (17 )     (1,424 )     (1,441 )
Recoveries     -       -       -       -       -       292       292  
Ending balance (September 30, 2024)   $ 1,235     $ 826     $ 3,500     $ 2,282     $ 181     $ 313     $ 8,337  

 

Reconciliation of Credit Loss Expense (Reversal)

 

The following table provides a reconciliation of the credit loss expense (reversal) on the condensed consolidated statements of earnings between the funded and unfunded components at the dates indicated:

 Schedule of Reconciliation of Credit Loss Expense

    2025     2024     2025     2024  
    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2025     2024     2025     2024  
Credit loss expense - funded   $ 639     $ 409     $ 1,539     $ 1,803  
Credit loss expense (reversal) - unfunded     124       (52 )     99       (193 )
Total Credit loss expense   $ 763     $ 357     $ 1,638     $ 1,610  

 

(continued)

 

10

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

The Company has divided the loan portfolio into six portfolio segments, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Bank’s Board of Directors. The Company identifies the portfolio segments as follows:

 

Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction. Residential real estate loans are underwritten based on repayment capacity and source, value of the underlying property, credit history and stability. The Company offers first and second one-to-four family mortgage loans; the collateral for these loans is generally the clients’ owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers’ financial condition. Multi-family and commercial real estate loans are secured by the subject property. Underwriting standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Construction loans to borrowers finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during the construction period, later converting to commercial or residential real estate loans after the construction is complete and amortization of the loan begins. Real estate development and construction loans are approved based on an analysis of the borrower and guarantor, the viability of the project and an acceptable percentage of the appraised value of the property securing the loan. Real estate development and construction loan funds are disbursed periodically based on the percentage of construction completed. The Company carefully monitors these loans with on-site inspections and requires the receipt of lien waivers on funds advanced. Development and construction loans are typically secured by the properties under development or construction, and personal guarantees are typically obtained. Further, to assure that reliance is not placed solely on the value of the underlying property, the Company considers the market conditions and feasibility of proposed projects, the financial condition and reputation of the borrower and guarantors, the amount of the borrower’s equity in the project, independent appraisals, cost estimates and pre-construction sales information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for future development for either commercial or residential use by the borrower. The Company carefully analyses the intended use of the property and the viability thereof.

 

Commercial. Commercial business loans and lines of credit consist of loans to small- and medium-sized companies. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Company’s commercial loans are secured loans, along with a small amount of unsecured loans. The Company’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Company mitigates these risks through its underwriting standards.

 

Consumer. Consumer loans are extended for various purposes, including purchases of automobiles, recreational vehicles, and boats. Also offered are home improvement loans, lines of credit, personal loans, and deposit account collateralized loans. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Loans to consumers are extended after a credit evaluation, including the creditworthiness of the borrower(s), the purpose of the credit, and the secondary source of repayment. Consumer loans are made at fixed and variable interest rates. Risk is mitigated by the fact that the loans are of smaller individual amounts.

 

(continued)

 

11

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Age analysis of past-due loans is as follows (Dollars in thousands):

 Schedule of Age Analysis of Past-due Loans

    Accruing Loans              
    30-59 Days Past Due     60-89 Days Past Due     Greater Than 90 Days Past Due     Total Past Due     Current     Nonaccrual Loans     Total Loans  
At September 30, 2025:                                                               
Residential real estate   $ -     $ -     $ -     $ -     $ 66,723     $ -     $ 66,723  
Multi-family real estate     -       -       -       -       67,435       -       67,435  
Commercial real estate     -       -       -       -       524,865       -       524,865  
Land and construction     -       -       -       -       43,364       -       43,364  
Commercial     800       -       -       800       41,829       2,975       45,604  
Consumer     143       99       -       242       65,489       -       65,731  
Total   $ 943     $ 99     $ -     $ 1,042     $ 809,705     $ 2,975     $ 813,722  
                                                         
At December 31, 2024:                                                        
Residential real estate   $ -     $ -     $ -     $ -     $ 74,064     $ -     $ 74,064  
Multi-family real estate     -       -       -       -       64,001       -       64,001  
Commercial real estate     -       -       -       -       485,671       -       485,671  
Land and construction     -       -       -       -       71,698       5,597       77,295  
Commercial     -       -       -       -       51,436       1,374       52,810  
Consumer     187       151       -       338       49,456       605       50,399  
Total   $ 187     $ 151     $ -     $ 338     $ 796,326     $ 7,576     $ 804,240  

 

The Company has not made any modifications of loans to borrowers experiencing financial difficulties during the three-month and nine-month periods ended September 30, 2025 and 2024.

 

The following table presents the amortized costs basis of loans on nonaccrual status, as of September 30, 2025 and December 31, 2024. As of September 30, 2025 and December 31, 2024 there were no loans 90 days or more past due and still accruing.

 Schedule of Amortized Costs Basis of Loans on Nonaccrual Status

    September 30, 2025  
(Dollars in thousands)  

Nonaccrual

Without ACL

    

Nonaccrual

With ACL

    

Total

Nonaccrual

  
Commercial   $ 960     $ 2,015     $ 2,975  

 

    December 31, 2024  
(Dollars in thousands)  

Nonaccrual

Without ACL

    

Nonaccrual

With ACL

    

Total

Nonaccrual

  
Land and construction   $ 5,597     $ -     $ 5,597  
Commercial     -       1,374       1,374  
Consumer     605       -       605  
Total   $ 6,202     $ 1,374     $ 7,576  

 

(continued)

 

12

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Collateral-Dependent Loans

 

The following table presents the amortized cost basis of non-accruing collateral-dependent loans by class of loans and type of collateral identified as of September 30, 2025 and December 31, 2024 under the current expected credit loss model:

 Schedule of Amortized Costs Basis of Loans on Nonaccrual Status Collateral Dependent Loans

    September 30, 2025  
(Dollars in thousands)   Real Estate     Other     Total  
Commercial   $ -     $ 960     $ 960  

 

    December 31, 2024  
(Dollars in thousands)   Real Estate     Other     Total  
Land and construction   $ 5,597     $ -     $ 5,597  
Commercial     -       1,374       1,374  
Consumer     605       -       605  
Total   $ 6,202     $ 1,374     $ 7,576  

 

Internally assigned loan grades are defined as follows:

 

Pass — a Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. These are loans that conform in all aspects to bank policy and regulatory requirements, and no repayment risk has been identified.

 

OLEM — an Other Loan Especially Mentioned has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date.

 

Substandard — a Substandard loan is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. Included in this category are loans that are current on their payments, but the Bank is unable to document the source of repayment. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.

 

Doubtful — a loan classified as Doubtful has all the weaknesses inherent in one classified as Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The Company charges off the estimated loss on any loan classified as Doubtful.

 

Loss — a loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The Company fully charges off any loan classified as loss.

 

(continued)

 

13

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 Schedule of Amortized Cost Basis

(Dollars in thousands)  

Year 5

     Year 4     Year 3     Year 2     Year 1     Prior     Revolving Loans (Amortized Cost Basis)     Revolving Loans Converted to Term Loans (Amortized Cost Basis)     Subtotal loans  
    Term Loans
Amortized Cost Basis by Origination Year		    

Revolving Loans

(Amortized Cost

    

Revolving Loans Converted to Term Loans

(Amortized Cost

        
(Dollars in thousands)  

September 30, 2025

     2024     2023     2022     2021     Prior     Basis)     Basis)     Total  
Residential real estate                                                                        
Pass   $ 3,552     $ -     $ 21,195     $ 22,025     $ 9,687     $ 9,786     $ -     $           -     $ 66,245  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       478       -       -       478  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 3,552     $ -     $ 21,195     $ 22,025     $ 9,687     $ 10,264     $ -     $ -     $ 66,723  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Multi-family real estate                                                                        
Pass   $ -     $ 4,970     $ 10,580     $ 26,388     $ 16,665     $ 8,832     $ -     $ -     $ 67,435  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ -     $ 4,970     $ 10,580     $ 26,388     $ 16,665     $ 8,832     $ -     $ -     $ 67,435  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 72,093     $ 74,920     $ 117,076     $ 184,821     $ 44,747     $ 30,053     $ -     $ -     $ 523,710  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       1,155       -       -       1,155  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 72,093     $ 74,920     $ 117,076     $ 184,821     $ 44,747     $ 31,208     $ -     $ -     $ 524,865  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Land and construction                                                                        
Pass   $ -     $ 1,763     $ 19,621     $ 18,378     $ 2,187     $ 1,415     $ -     $ -     $ 43,364  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ -     $ 1,763     $ 19,621     $ 18,378     $ 2,187     $ 1,415     $ -     $ -     $ 43,364  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 16,060     $ 9,944     $ 12,095     $ 1,745     $ 468     $ -     $ -     $ -     $ 40,312  
OLEM (Other Loans Especially Mentioned)     -       -       2,317       -       -       -       -       -       2,317  
Substandard     1,174       906       895       -       -       -       -       -       2,975  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 17,234     $ 10,850     $ 15,307     $ 1,745     $ 468     $ -     $ -     $ -     $ 45,604  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Consumer                                                                        
Pass   $ 820     $ 9     $ 2,255     $ 1,240     $ 565     $ -     $ 60,842     $ -     $ 65,731  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 820     $ 9     $ 2,255     $ 1,240     $ 565     $ -     $ 60,842     $ -     $ 65,731  
Current period gross write-offs   $ -     $ -     $ (183 )   $ (297 )   $ (26 )   $ (20 )   $ -     $ -     $ (526 )

 

(continued)

 

14

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

(Dollars in thousands)  

Year 5

     Year 4     Year 3     Year 2     Year 1     Prior     Revolving Loans (Amortized Cost Basis)     Revolving Loans Converted to Term Loans (Amortized Cost Basis)     Subtotal loans  
                Revolving    

Revolving

Loans

Converted

to Term

        
    Term Loans     Loans     Loans        
    Amortized Cost Basis by Origination Year     (Amortized     (Amortized        
(Dollars in thousands)   2024     2023     2022     2021     2020     Prior     Cost Basis)     Cost Basis)     Total  
Residential real estate                                                                        
Pass   $ 7,500     $ 21,301     $ 20,612     $ 8,976     $ 4,220     $ 7,089     $ 289     $            -     $ 69,987  
OLEM (Other Loans Especially Mentioned)     -       -       1,563       -       -       -       -       -       1,563  
Substandard     -       -       1,880       -       -       634       -       -       2,514  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 7,500     $ 21,301     $ 24,055     $ 8,976     $ 4,220     $ 7,723     $ 289     $ -     $ 74,064  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Multi-family real estate                                                                        
Pass   $ 5,000     $ 586     $ 27,137     $ 22,239     $ 5,882     $ 3,157     $ -     $ -     $ 64,001  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 5,000     $ 586     $ 27,137     $ 22,239     $ 5,882     $ 3,157     $ -     $ -     $ 64,001  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 92,827     $ 124,755     $ 170,118     $ 42,975     $ 12,527     $ 16,328     $ -     $ -     $ 459,530  
OLEM (Other Loans Especially Mentioned)     -       -       16,875       5,294       1,870       927       -       -       24,966  
Substandard     -       -       -       -       -       1,175       -       -       1,175  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 92,827     $ 124,755     $ 186,993     $ 48,269     $ 14,397     $ 18,430     $ -     $ -     $ 485,671  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Land and construction                                                                        
Pass   $ 2,114     $ 47,795     $ 15,230     $ 2,388     $ 1,445     $ 2,726     $ -     $ -     $ 71,698  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       5,597       -       -       -       -       -       -       5,597  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 2,114     $ 53,392     $ 15,230     $ 2,388     $ 1,445     $ 2,726     $ -     $ -     $ 77,295  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 22,249     $ 22,223     $ 1,923     $ 1,461     $ 603     $ -     $ -     $ -     $ 48,459  
OLEM (Other Loans Especially Mentioned)     5       2,972       -       -       -       -       -       -       2,977  
Substandard     -       1,374       -       -       -       -       -       -       1,374  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 22,254     $ 26,569     $ 1,923     $ 1,461     $ 603     $ -     $ -     $ -     $ 52,810  
Current period gross write-offs   $ -     $ -     $ -     $ -     $ -     $ (17 )   $ -     $ -     $ (17 )
Consumer                                                                        
Pass   $ 73     $ 4,098     $ 2,733     $ 1,313     $ 40     $ 2     $ 41,535     $ -     $ 49,794  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       605       -       -       -       -       -       -       605  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 73     $ 4,703     $ 2,733     $ 1,313     $ 40     $ 2     $ 41,535     $ -     $ 50,399  
Current period gross write-offs   $ -     $ (701 )   $ (781 )   $ (274 )   $ -     $ (4 )   $ -     $ -     $ (1,760 )

 

(continued)

 

15

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(4) Earnings Per Share. Basic earnings per share have been computed on the basis of the weighted-average number of shares of common stock outstanding during the periods. For the three-month and nine-month periods ended September 30, 2025 and 2024, the Company had 525,641 Series C Convertible Preferred shares outstanding, each share of Series C Convertible Preferred can be converted into one share of common stock under specific and limited circumstances at any time at the option of the holder. The conversion feature is considered to be diluted earnings per share (EPS) in accordance with ASC 260. The dilutive effect is calculated using the if-converted method. On October 1, 2025, the Company amended the conversion rights of its Series B Convertible Preferred shares to allow conversion at the holder’s discretion. As a result of this amendment, diluted earnings per share amounts for all periods presented have been restated to reflect the impact of the amendment to the rights of the Series B Preferred shares, as described in Note 10. This amendment resulted in a change in the calculation of diluted earnings per share, applied retrospectively to ensure comparability.

 Schedule of Basic and Diluted Loss Per Share

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2025     2024     2025     2024  
(Dollars in thousands, except per share amounts)   Earnings     Weighted
 Average Shares		     Amount     Earnings     Weighted
 Average Shares		     Amount     Earnings     Weighted
 Average Shares		     Amount     Earnings     Weighted
 Average Shares		     Amount  
                                                                         
Basic EPS:   $ 4,323       11,772,744     $ 0.37     $ 3,302       9,763,319     $ 0.34     $ 11,795       11,743,061     $ 1.00     $ 9,173       9,009,138     $ 1.02  
Effect of conversion of series B & C preferred shares             11,639,530                       11,639,530                       11,639,530                       11,470,711          
                                                                                                 
Diluted EPS:   $ 4,323       23,412,274     $ 0.18     $ 3,302       21,402,849     $ 0.15     $ 11,795       23,382,591     $ 0.50     $ 9,173       20,479,849     $ 0.45  

 

(5) Stock-Based Compensation.

 

The Company is authorized to grant stock options, stock grants and other forms of equity-based compensation under its 2018 Equity Incentive Plan (the “2018 Plan”). The plan has been approved by the shareholders. The Company is currently authorized to issue up to 1,550,000 shares of common stock under the 2018 Plan. At September 30, 2025, 728,627 shares remain available for grant.

 

During the nine-month periods ended September 30, 2025 and 2024, the Company issued 62,171 and 73,050 shares, respectively, to employees for services performed and recorded compensation expense of $296,000 and $307,000, respectively. During the nine-month periods ended September 30, 2025 and 2024, the Company issued 132,861 and 42,610 shares to a director and recorded compensation expense of $579,000 and $185,000, respectively.

 

(continued)

 

16

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(6) Fair Value Measurements.

 

Debt securities available for sale measured at fair value on a recurring basis are summarized below (Dollars in thousands):

 Schedule of Debt Securities Available for Sale Measured at Fair Value on Recurring Basis

    Fair Value     (Level 1)     (Level 2)     (Level 3)  
    Fair Value Measurements Using  
          Quoted Prices     Significant        
          In Active     Other     Significant  
          Markets for     Observable     Unobservable  
          Identical Assets     Inputs     Inputs  
    Fair Value     (Level 1)     (Level 2)     (Level 3)  
At September 30, 2025:                                                   
SBA Pool Securities   $ 465     $ -     $ 465     $ -  
Collateralized mortgage obligations     107       -       107       -  
Taxable municipal securities     12,500       -       12,500       -  
Mortgage-backed securities     9,854       -       9,854       -  
Total   $ 22,926     $ -     $ 22,926     $ -  
                                 
At December 31, 2024:                                
SBA Pool Securities   $ 567     $ -     $ 567     $ -  
Collateralized mortgage obligations     111       -       111       -  
Taxable municipal securities     11,914       -       11,914       -  
Mortgage-backed securities     10,181       -       10,181       -  
Total   $ 22,773     $ -     $ 22,773     $ -  

 

(7) Financial Instruments. The estimated fair values and fair value measurement method with respect to the Company’s financial instruments were as follows (Dollars in thousands):

 Schedule of Estimated Fair Value of Financial Instruments

    At September 30, 2025     At December 31, 2024  
    Carrying
Amount		     Fair Value     Level     Carrying Amount     Fair Value     Level  
                                     
Financial assets:                                                
Cash and cash equivalents   $ 235,086     $ 235,086       1     $ 93,630     $ 93,630       1  
Debt securities available for sale     22,926       22,926       2       22,773       22,773       2  
Debt securities held-to-maturity     246       221       2       281       247       2  
Loans     802,812       706,752       3       794,985       766,871       3  
Federal Home Loan Bank stock     658       658       3       2,929       2,929       3  
Accrued interest receivable     3,171       3,171       3       3,348       3,348       3  
                                                 
Financial liabilities:                                                
Deposit liabilities     959,487       945,942       3       772,195       769,561       3  
Federal Home Loan Bank advances     -       -       3       50,000       49,815       3  

 

(continued)

 

17

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(8) Off- Balance Sheet Financial Instruments. The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit, unused lines of credit, and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed consolidated balance sheets. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

 

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for off-balance sheet instruments.

 

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the counterparty.

 

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit to customers is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments. Standby letters of credit generally have expiration dates within one year.

 

Commitments to extend credit, unused lines of credit, and standby letters of credit typically result in loans with a market interest rate when funded. A summary of the contractual amounts of the Company’s financial instruments with off-balance sheet risk at September 30, 2025 follows (Dollars in thousands):

 Schedule of Off-Balance Sheet Risks of Financial Instruments

Commitments to extend credit   $ 33,997  
         
Unused lines of credit   $ 68,695  
         
Standby letters of credit   $ 3,779  

 

(9) Regulatory Matters. The Bank is subject to various regulatory capital requirements administered by the bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

 

As of September 30, 2025 and December 31, 2024, the Bank met all capital adequacy requirements to which it is subject to. The Bank’s actual capital amounts and percentages are presented in the table below (Dollars in thousands):

 Schedule of Capital Amounts, Ratios and Regulatory Thresholds

    Actual     To Be Well Capitalized Under Prompt Corrective Action Regulations
(CBLR Framework)		  
    Amount     %     Amount     %  
As of September 30, 2025:                                
Tier 1 Capital to Total Assets   $ 120,976       11.71 %   $ 93,013       9.00 %
                                 
As of December 31, 2024:                                
Tier 1 Capital to Total Assets   $ 107,112       10.91 %   $ 88,381       9.00 %

 

(continued)

 

18

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(10) Series B and C Preferred Stock and ATM offering program.

 

Except in the event of liquidation, if the Company declares or pays a dividend or distribution on the common stock, the Company shall simultaneously declare and pay a dividend on the Series B Preferred Stock on a pro rata basis with the common stock determined on an as-converted basis assuming all shares of Series B Preferred Stock had been converted immediately prior to the record date of the applicable dividend. As of September 30, 2025, the Series B Preferred Stock is convertible into 11,113,889 shares of common stock, at the option of the Company, subject to the prior fulfilment of the following conditions: (i) such conversion shall have been approved by the holders of a majority of the outstanding common stock of the Company; and (ii) such conversion must not result in any holder of the Series B Preferred Stock and any persons with whom the holder may be acting in concert, becoming the beneficial owners of more than 9.9% of the outstanding shares of the Company’s common stock, unless the issuance, shall have been approved by all banking regulatory authorities whose approval is required for the acquisition of such shares. The number of shares issuable upon conversion is subject to adjustment based on the terms of the Series B Preferred Stock. The Series B Preferred has preferential liquidation rights over common stockholders. The liquidation price is the greater of $25,000 per share of Series B Preferred or such amount per share of Series B Preferred that would have been payable had all shares of the Series B Preferred been converted into common stock pursuant to the terms of the Series B Preferred Stock’s Certificate of Designation immediately prior to a liquidation. The Series B Preferred generally has no voting rights except as provided in the Certificate of Designation.

 

The Series B Preferred Stock are subdivided into three categories. The Company is authorized to issue 760 shares of Series B-1; 260 shares of Series B-2; and 500 shares of Series B-3. Each category of the Series B preferred stock has substantially the same rights, preferences, powers, restrictions and limitations, except that the initial conversion price of the Series B-1 is $2.50 per share; the initial conversion price for Series B-2 is $4.00 per share, and the initial conversion price for Series B-3 is $4.50 per share. Two Company directors each independently own 380 shares of Series B-1, 130 shares of Series B-2, and 170 shares of Series B-3.

 

During the Annual Meeting of Shareholders held on June 27, 2023, the Company’s shareholders approved the issuance of up to 11,113,889 shares of common stock upon conversion of the Series B preferred stock previously issued by the Company.

 

On March 8, 2024, the Company’s Board of Directors approved the issuance of up to 4,000,000 of Series C Preferred Stock. Each share of the Series C Preferred Stock is convertible into one share of common stock, at the option of the holder, provided that upon such conversion the holder, together with all affiliates of the holder, will not own or control in the aggregate more than 9.9% of the outstanding shares of the Company’s common stock. As of September 30, 2025, 525,641 shares of Series C Preferred Stock are issued and outstanding.

 

On August 9, 2024, the Company filed a Form S-3 registration statement with Securities and Exchange Commission, registering for sale of up to an aggregate of $25 million in shares of common stock through an at-the-market offering (“ATM Program”). Under the ATM Program, the Company sold 1,958,661 shares during the year ended on December 31, 2024, generating net proceeds of $9,062,244. During the nine-month period ended September 30, 2025, the Company sold an additional 52,819 common stock shares under the ATM program, generating net proceeds of $217,000. The ATM Program allows the Company to issue and sell to the public from time to time at prevailing market prices, at the Company’s discretion, newly issued shares of common stock. The ATM Program is expected to provide the Company with additional financing flexibility and intends to use the net proceeds from the ATM Program to facilitate growth.

 

On October 1, 2025, the Company filed a Form 8-K with the Securities and Exchange Commission to report the filing of an Amended and Restated Certificate of Designation for its Series B Preferred Stock (see Exhibit 3.3, 2025 Amended and Restated Certificate of Designation of Series B Preferred Stock on Form 8-K (filed with the SEC on October 1, 2025)). The amendment, which was approved by the Board of Directors and the requisite holders of the Series B Preferred Stock, modifies certain terms and preferences of the Series B Preferred Stock, including conversion rights which allow conversion at the holder’s discretion. The amendment became effective upon filing with the Secretary of State of Florida. As a result of this amendment, diluted earnings per share has been updated for all periods presented to reflect this change in capital structure.

 

(continued)

 

19


 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(11) Contingencies.

 

Various claims arise from time to time in the normal course of business. In the opinion of management, none have occurred that will have a material effect on the Company’s condensed consolidated financial statements.

 

(12) Borrowings.

 

As of September 30, 2025, the Company had no outstanding borrowings from the Federal Home Loan Bank (“FHLB”). The table below presents FHLB advances outstanding as follows (Dollars in thousands):

 Schedule of Maturities and Interest Rates on Federal Home Loan Bank and Federal Reserve Bank Advances

    Maturity     Interest     September 30,     December 31,  
At September 30, 2025:   Year Ending     Rate     2025     2024  
FHLB     2025       4.57 %   $ -     $ 10,000  
FHLB     2025       4.43 %     -       30,000  
FHLB     2025       1.01 %     -       10,000  
                    $ -     $ 50,000  

 

FHLB advances were structured as advances with potential calls on a quarterly basis.

 

FHLB advances were collateralized by a blanket lien requiring the Company to maintain certain first mortgage loans as pledged collateral. At September 30, 2025, the Company had credit availability of $249.7 million. At September 30, 2025, the Company had loans pledged with a carrying value of $434.9 million as collateral for any FHLB advances.

 

In addition, the Bank has a collateralized line of credit with the Federal Reserve Bank, which is secured by mix of investment securities and loans with fair value of $56.0 million as of September 30, 2025.

 

At September 30, 2025, the Company also had unsecured lines of credit amounting to $73.5 million with five correspondent banks to purchase federal funds. Disbursements on the lines are subject to the approval of correspondent banks. At September 30, 2025 there were no borrowings under these lines of credit.

 

(continued)

 

20

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto presented elsewhere in this report. For additional information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2024, in the Annual Report on Form 10-K.

 

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of the Company, including adverse changes in economic, political and market conditions, losses from the Company’s lending activities, increases in interest rates, the possible loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of federal and state securities laws and the impact of changes in technology in the banking industry. Although the Company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the Company’s actual results will not differ materially from any results expressed or implied by the Company’s forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance.

 

Strategic Plan

 

Our key strategic initiatives are designed to generate continued growth in earning assets, core transaction deposits, treasury management fee income, while operating with an efficient cost structure. Continued emphasis on expansion of our South Florida customer base and exploring additional niche lines of business are also part of our strategic plan.

 

We believe providing our clients with reasonable solutions that meet their business and personal needs fosters stability in our client base, builds full-service banking relationships, and allows for profitable growth that enhances shareholder returns. We intend to deliver the solutions to clients in a very personalized manner while investing in talent and leveraging modern technology to facilitate efficiency and decrease client pain points while enhancing our competitiveness.

 

We are focused on full-service banking relationships, continuing to identify deposit growth opportunities among our existing customer base and prospects throughout South Florida, Florida, and the United States. Improving our core funding capabilities is foundational to the ability to support our opportunity to capitalize on the strong business and real estate market in South Florida and with our niche skilled nursing facility and merchant cash advance markets. We will accomplish this through the addition of experienced and skilled bankers to our business development and retail banking teams, and we are modernizing and improving our products and digital services to better support our personalized business model. This includes upgrading our core banking system in 2025, including our online banking and mobile banking applications. We believe adding this talent and upgrading our core banking system and client facing applications will allow us to better service local area small businesses that will add granularity and diversification to our customer base and balance sheet, while improving the utilization of our local area branches.

 

Modernizing our technology and improving our products and services allows us to better support our personalized business model to our niche business owner-operator client base with less friction, a human touch, and we believe better convenience than the large banks. In coordination with our Treasury Cash Management capabilities this has allowed us to enter niche businesses including banking services to Skilled Nursing Facilities in the areas of CRE and Asset-Based Lending (ABL) while capturing the business operating accounts. In addition, we have built capabilities in Small Business Administration (SBA) lending, entering the space in late 2023 and being designated as a Preferred Lender under the SBA’s Preferred Lenders Program (PLP) in the first quarter of 2025. Under the program the Bank offers SBA-guaranteed 7A loans generally secured by accounts receivable, inventory, equipment, or real estate. Management has implemented initiatives that have enabled us to grow our loan portfolio primarily with South Florida and Florida generated relationships in the commercial real estate, owner-occupied commercial real estate, multifamily, and commercial and industrial sectors.

 

In treasury management services, our primary focus will remain on merchant cash advance providers and the related electronic funds transfer line of business. For this revenue source to increase further in a meaningful way, automation will be necessary to further improve efficiency. We are currently investing in the necessary technology and expect efficiencies to occur throughout 2025 and beyond.

 

(continued)

 

21


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Our strategic plan emphasizes and builds upon initiatives focused on strengthening credit oversight and credit administrative processes and procedures. Moreover, management continues to identify loan growth opportunities that are designed to improve overall profitability without sacrificing credit quality and underwriting standards. This growth oriented strategic direction is expected to be facilitated by maintaining credit administration objectives including a risk-based and comprehensive credit culture and a credit administrative infrastructure that reinforces appropriate risk management practices.

 

Financial Condition at September 30, 2025 and December 31, 2024

 

Capital Levels

 

As of September 30, 2025 and December 31, 2024, the Bank is well capitalized under regulatory guidelines.

 

Refer to Note 9 in the condensed consolidated financial statements, which presents the Bank’s actual and required minimum capital ratios under Prompt Corrective Action Regulations (CBLR Framework).

 

Overview

 

The Company’s total assets increased by approximately $150.1 million to $1.08 billion at September 30, 2025, from $932.9 million at December 31, 2024, primarily due to increases in cash and cash equivalents. Net loans increased by $7.8 million to $802.8 million at September 30, 2025, from $795.0 million at December 31, 2024. Deposits grew by approximately $187.3 million to $959.5 million at September 30, 2025, from $772.2 million at December 31, 2024. Total stockholders’ equity increased by approximately $13.7 million to $116.9 million at September 30, 2025, from $103.2 million at December 31, 2024, primarily due to net earnings, proceeds from common stock sales, and unrealized gains on debt securities available for sale.

 

The following table shows selected information for the period/year ended or at the dates indicated:

 

    Nine Months Ended     Year Ended  
    September 30, 2025     December 31, 2024  
             
Average equity as a percentage of average assets     11.2 %     9.3 %
                 
Equity to total assets at end of period     10.8 %     11.1 %
                 
Return on average assets (1)     1.6 %     1.4 %
                 
Return on average equity (1)     14.3 %     7.3 %
                 
Noninterest expenses to average assets (1)     2.5 %     2.1 %

 

(1) Annualized for the nine months ended September 30, 2025.

 

Liquidity and Sources of Funds

 

The Company’s sources of funds include customer deposits, loan repayments, earnings, federal funds market, and access to various borrowing arrangements. These includes borrowing capacity with Federal Home Loan Bank of Atlanta (“FHLB”), the Federal Reserve Bank, and five correspondent banks.

 

Our liquidity is derived primarily from our deposit base, scheduled amortization and prepayments of loans and debt securities, funds provided by operations, and capital. Additionally, as a commercial bank, we are expected to maintain an adequate liquidity position. The Company’s liquidity position may consist of cash on hand, cash on demand deposit with correspondent banks, federal funds sold, and unpledged marketable securities such as United States government treasury and agency securities, municipal securities, U.S. agency mortgage-backed securities, and asset-backed securities. Some of our securities are pledged to the Federal Reserve Bank to secure borrowing capacity. The market value of securities pledged to the Federal Reserve Bank was $1.7 million at September 30, 2025.

 

Deposits increased by approximately $187.3 million during the nine-month period ended September 30, 2025. The increase in deposits provided funding for new loan originations and repayment of Federal Home Loan Bank advances.

 

(continued)

 

22


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

In addition to obtaining funds from depositors, the Company had borrowing capacity of $249.7 million in established borrowing capacity with the FHLB. The Company’s borrowing facility is subject to collateral and stock ownership requirements, as well as prior FHLB consent to each advance. As of September 30, 2025, first mortgage loans with a carrying value of $434.9 million were pledged to FHLB. At September 30, 2025, the Company also had available lines of credit amounting to $73.5 million with five correspondent banks, disbursements on the lines of credit are subject to the approval of the correspondent banks. The Company monitor its liquidity position on daily basis and believes its current funding sources, including deposits, borrowing capacity, unencumbered liquid assets, and access to the federal funds market, are adequate to meet its ongoing operating needs.

 

Off-Balance Sheet Arrangements

 

Refer to Note 8 in the condensed consolidated financial statements for Off-Balance Sheet Arrangements.

 

Results of Operations

 

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; (v) net interest margin; and (vi) the ratio of average interest-earning assets to average interest-bearing liabilities.

 

    Three Months Ended September 30,  
    2025     2024  
          Interest     Average           Interest     Average  
    Average     Income/     Yield/     Average     Income/     Yield/  
(Dollars in thousands)   Balance     Expense     Rate(5)     Balance     Expense     Rate(5)  
Interest-earning assets:                                                
Loans   $ 800,336     $ 14,082       7.04 %   $ 770,206     $ 13,588       7.06 %
Securities     22,695       153       2.70 %     24,045       163       2.71 %
Other (1)     188,109       2,086       4.44 %     110,521       1583       5.73 %
Total interest-earning assets     1,011,140       16,321       6.46 %     904,772       15,334       6.78 %
                                                 
Cash and due from banks     9,557                       13,500                  
Premises and equipment     2,414                       1,957                  
Other     5,209                       7,025                  
Total assets   $ 1,028,320                     $ 927,254                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 286,156       1,800       2.52 %   $ 326,365       2,707       3.32 %
Time deposits     320,800       3,473       4.33 %     244,374       3,255       5.33 %
Borrowings (2)     -       -       -       40,120       410       4.09 %
Total interest-bearing liabilities     606,956       5,273       3.48 %     610,859       6,372       4.17 %
                                                 
Noninterest-bearing demand deposits     298,670                       220,564                  
Other liabilities     8,687                       6,217                  
Stockholders’ equity     114,007                       89,614                  
Total liabilities and stockholders’ equity   $ 1,028,320                     $ 927,254                  
                                                 
Net interest income           $ 11,048                     $ 8,962          
                                                 
Interest rate spread (3)                     2.98 %                     2.61 %
                                                 
Net interest margin (4)                     4.37 %                     3.96 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.67                       1.48                  

 

(1) Includes interest-earning deposits, FHLB stock dividends, and preferred shares earning dividends.
(2) Includes Federal Home Loan Bank advances.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average interest-earning assets.
(5) Annualized.

 

(continued)

 

23


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

    Nine Months Ended September 30,  
    2025     2024  
          Interest     Average           Interest     Average  
    Average     Income/     Yield/     Average     Income/     Yield/  
(Dollars in thousands)   Balance     Expense     Rate(5)     Balance     Expense     Rate(5)  
Interest-earning assets:                                                
Loans   $ 800,117     $ 41,709       6.95 %   $ 743,537     $ 38,372       6.88 %
Securities     22,785       471       2.76 %     23,900       498       2.78 %
Other (1)     143,171       4,736       4.41 %     121,174       5,116       5.63 %
Total interest-earning assets     966,073       46,916       6.48 %     888,611       43,986       6.60 %
                                                 
Cash and due from banks     12,078                       13,844                  
Premises and equipment     2,297                       1,720                  
Other     4,383                       6,523                  
                                                 
Total assets   $ 984,831                     $ 910,698                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 281,207       5,293       2.51 %   $ 323,694       7,613       3.14 %
Time deposits     321,011       10,580       4.39 %     234,652       9,346       5.31 %
Borrowings (2)     11,482       327       3.80 %     49,712       1,574       4.22 %
Total interest-bearing liabilities     613,700       16,200       3.52 %     608,058       18,533       4.06 %
                                                 
Noninterest-bearing demand deposits     253,000                       214,773                  
Other liabilities     8,284                       5,894                  
Stockholders’ equity     109,847                       81,973                  
Total liabilities and stockholders’ equity   $ 984,831                     $ 910,698                  
                                                 
Net interest income           $ 30,716                     $ 25,453          
                                                 
Interest rate spread (3)                     2.96 %                     2.54 %
                                                 
Net interest margin (4)                     4.24 %                     3.82 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.57                       1.46                  

 

(1) Includes interest-earning deposits, FHLB stock dividends, and preferred shares earning dividends.
(2) Includes Federal Home Loan Bank advances.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average interest-earning assets.
(5) Annualized.

 

(continued)

 

24

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Comparison of the three-month periods ended September 30, 2025, and 2024

 

    Three Months Ended     Increase /  
(Dollars in thousands, except per share   September 30,     (Decrease)  
amounts)   2025     2024     Amount     Percentage  
Total interest income   $ 16,321     $ 15,334     $ 987       6 %
Total interest expense     5,273       6,372       (1,099 )     (17 )%
Net interest income     11,048       8,962       2,086       23 %
Credit loss expense     763       357       406       114 %
Net interest income after credit loss expense     10,285       8,605       1,680       20 %
Total noninterest income     1,982       1,115       867       78 %
Total noninterest expenses     6,604       5,285       1,319       25 %
Net earnings before income taxes     5,663       4,435       1,228       28 %
Income taxes     1,340       1,133       207       18 %
Net earnings   $ 4,323     $ 3,302       1,021       31 %
Net earnings per share - Basic   $ 0.37     $ 0.34                  
Net earnings per share - Diluted(1)   $ 0.18     $ 0.15                  

 

(1) On October 1, 2025, the Company amended the terms of the Series B preferred shares, as detailed in Note 10 to the consolidated financial statements. This amendment affected the calculation of diluted earnings per share, and accordingly, all periods diluted EPS figures have been restated to reflect the new dilution structure. This ensures a consistent basis of comparison.

 

Net earnings. Net earnings for the three months ended September 30, 2025, were $4.3 million or $.37 per basic share and $.18 per diluted share compared to net earnings of $3.3 million or $.34 per basic share and $.15 per diluted share for the three months ended September 30, 2024. The increase in net earnings during the three months ended September 30, 2025 compared to three months ended September 30, 2024 is primarily attributed to an increase in net interest income and noninterest income.

 

Interest income. Interest income increased to $16.3 million for the three months ended September 30, 2025 compared to $15.3 million for the three months ended September 30, 2024, the increase was primarily attributed to the increase in average balances of interest earning assets.

 

Interest expense. Interest expense decreased by $1.1 million to $5.3 million for the three months ended September 30, 2025, compared to $6.4 million for the three months ended September 30, 2024, primarily due to reduction in deposit rates and repayment of borrowings, which lowered overall interest expense.

 

Credit loss expense. The Company recorded a credit loss expense of $0.76 million for the three months ended September 30, 2025, compared to a credit loss expense of $0.36 million for the three months ended September 30, 2024. The expected credit loss expense is charged to earnings as losses are expected to have occurred in order to bring the total allowance for credit losses to a level deemed appropriate by management to absorb losses expected. Management’s periodic evaluation of the adequacy of the allowance for credit losses is based upon historical experience, the volume and type of lending conducted by the Company, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for credit losses totaled $10.0 million or 1.23% of loans outstanding at September 30, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. During the three-months ended September 30, 2025, the net recovery amounting to $41,000 resulted from consumer lending.

 

Noninterest income. Total noninterest income was $2.0 million for the three months ended September 30, 2025, compared to $1.1 for the three months ended September 30, 2024. The increase reflects an increase in wire transfer and ACH fees during the third quarter of 2025.

 

Noninterest expenses. Total noninterest expenses increased to $6.6 million for the three months ended September 30, 2025, compared to $5.3 million for the three months ended September 30, 2024, primarily due to employee compensation and benefits, data processing, and other expenses.

 

(continued)

 

25


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Comparison of the nine-month periods ended September 30, 2025, and 2024

 

    Nine Months Ended     Increase /  
(Dollars in thousands, except per share   September 30,     (Decrease)  
amounts)   2025     2024     Amount     Percentage  
Total interest income   $ 46,916     $ 43,986     $ 2,930       7 %
Total interest expense     16,200       18,533       (2,333 )     (13 )%
Net interest income     30,716       25,453       5,263       21 %
Credit loss expense     1,638       1,610       28       2 %
Net interest income after credit loss expense     29,078       23,843       5,235       22 %
Total noninterest income     5,047       3,555       1,492       42 %
Total noninterest expenses     18,411       15,078       3,333       22 %
Net earnings before income taxes     15,714       12,320       3,394       28 %
Income taxes     3,919       3,147       772       25 %
Net earnings   $ 11,795     $ 9,173       2,622       29 %
Net earnings per share - Basic   $ 1.00     $ 1.02                  
Net earnings per share - Diluted(1)   $ 0.50     $ 0.45                  

 

(1) On October 1, 2025, the Company amended the terms of the Series B preferred shares, as detailed in Note 10 to the consolidated financial statements. This amendment affected the calculation of diluted earnings per share, and accordingly, all periods diluted EPS figures have been restated to reflect the new dilution structure. This ensures a consistent basis of comparison.

 

Net earnings. Net earnings for the nine months ended September 30, 2025, were $11.8 million or $1.00 per basic share and $.50 per diluted share compared to net earnings of $9.2 million or $1.02 per basic share and $.45 per diluted share for the nine months ended September 30, 2024. The increase in net earnings during the nine months ended September 30, 2025 compared to nine months ended September 30, 2024 is primarily attributed to an increase in net interest income and noninterest income.

 

Interest income. Interest income increased to $46.9 million for the nine months ended September 30, 2025 compared to $44.0 million for the nine months ended September 30, 2024. The increase is due primarily to the growth in the average balances of interest earning assets.

 

Interest expense. Interest expense decreased by $2.3 million to $16.2 million for the nine months ended September 30, 2025, compared to $18.5 million for the nine months ended September 30, 2024, primarily due to a reduction in deposit rates and changes in the composition of deposits.

 

Credit loss expense. The Company recorded a credit loss expense of $1.64 million for the nine months ended September 30, 2025, compared to $1.61 million for the nine months ended September 30, 2024, respectively. The expected credit loss expense is charged to earnings as losses are expected to have occurred in order to bring the total allowance for credit losses to a level deemed appropriate by management to absorb losses expected. Management’s periodic evaluation of the adequacy of the allowance for credit losses is based upon historical experience, the volume and type of lending conducted by the Company, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for credit losses totaled $10.0 million or 1.23% of loans outstanding at September 30, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. During the nine-months ended September 30, 2025, the net charge off amounting to $181,000 resulted from consumer lending.

 

Noninterest income. Total noninterest income increased to $5.0 million for the nine months ended September 30, 2025, compared to $3.6 million for the nine months ended September 30, 2024, due to increased wire transfer and ACH fees during the nine months ended September 30, 2025.

 

Noninterest expenses. Total noninterest expenses increased to $18.4 million for the nine months ended September 30, 2025, compared to $15.1 million for the nine months ended September 30, 2024, primarily due to employee compensation and benefits, occupancy and equipment, and other expenses.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risks

 

Not applicable.

 

Item 4. Controls and Procedures

 

The Company’s management evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report, and based on this evaluation, the Principal Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective.

 

There have been no significant changes in the Company’s internal control over financial reporting during the quarter ended September 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

 

(continued)

 

26

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently a party to any material legal proceedings.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Not applicable.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Not applicable.

 

Item 6. Exhibits

 

The exhibits listed in the Exhibit Index following the signature page are filed or furnished with or incorporated by reference into this report.

 

27

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  OPTIMUMBANK HOLDINGS, INC.
  (Registrant)
     
Date: November 10, 2025 By: /s/ Timothy Terry
    Timothy Terry
    Principal Executive Officer
     
Date: November 10, 2025 By: /s/ Elliot Nunez
    Elliot Nunez
    Chief Financial Officer

 

28

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
3.1   Amended and restated Articles of incorporation (incorporated by reference from Annual Report on Form 10-K filed with the SEC on February 26, 2025)
     
3.2   Bylaws (incorporated by reference from Current Report on Form 8-K filed with the SEC on May 11, 2004)
     
3.3   2025 Amended and Restated Certificate of Designation of Series B Preferred Stock on Form 8-K (filed with the SEC on October 1, 2025)
     
4.1   Form of stock certificate (incorporated by reference from Quarterly Report on Form 10-QSB filed with the SEC on August 16, 2004)
     
4.2   Description of Securities (incorporated by reference from Annual Report on Form 10-K filed with the SEC on February 26, 2025)
     
31.1   Certification of Principal Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
     
31.2   Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Securities Exchange Act of 1934
     
32.1   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS   Inline XBRL Instance Document
     
101.SCH   Inline XBRL Taxonomy Extension Schema Document
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase Document
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   Inline XBRL Taxonomy Extension Presentation Linkbase Document
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase Document
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

29

 

EX-31.1 2 ex31-1.htm EX-31.1

 

EXHIBIT 31.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

REQUIRED BY RULE 13a-14(a)/15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: November 10, 2025

 

 

 
EX-31.2 3 ex31-2.htm EX-31.2

 

EXHIBIT 31.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

REQUIRED BY RULE 13a-14(a)/15d-14(a)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Elliot Nunez
  Elliot Nunez
  Chief Financial Officer
  Date: November 10, 2025

 

 

 
EX-32.1 4 ex32-1.htm EX-32.1

 

EXHIBIT 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, as Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted by § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: November 10, 2025

 

 

 
EX-32.2 5 ex32-2.htm EX-32.2

 

EXHIBIT 32.2

 

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, as Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted by § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

  /s/ Elliot Nunez
  Elliot Nunez
  Chief Financial Officer
  Date: November 10, 2025