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 June 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: 11,751,082 shares of common stock, $.01 par value, issued and outstanding as of August 8, 2025.

 

 

 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

INDEX

 

  Page
 
PART I. FINANCIAL INFORMATION 1
   
Item 1. Financial Statements 1
   
Condensed Consolidated Balance Sheets — June 30, 2025 (unaudited) and December 31, 2024 (audited) 1
 
Condensed Consolidated Statements of Earnings — Three and Six Months ended June 30, 2025 and 2024 (unaudited) 2
 
Condensed Consolidated Statements of Comprehensive Income — Three and Six Months ended June 30, 2025 and 2024 (unaudited) 3
 
Condensed Consolidated Statements of Stockholders’ Equity — Three and Six Months ended June 30, 2025 and 2024 (unaudited) 4
 
Condensed Consolidated Statements of Cash Flows — Six Months ended June 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)

 

   

June 30, 2025

     December 31, 2024  
      (Unaudited)       (Audited)  
Assets:                
Cash and due from banks   $ 8,833     $ 13,982  
Interest-bearing deposits with banks     172,921       79,648  
Total cash and cash equivalents     181,754       93,630  
Debt securities available for sale     22,378       22,773  
Debt securities held-to-maturity (fair value of $232 and $247)     260       281  
Loans, net of allowance for credit losses of $9,338 and $8,660     774,548       794,985  
Federal Home Loan Bank stock     658       2,929  
Premises and equipment, net     2,426       2,062  
Right-of-use lease assets     2,552       2,679  
Accrued interest receivable     3,138       3,348  
Deferred tax asset     3,135       3,001  
Other assets     8,278       7,245  
                 
Total assets   $ 999,127     $ 932,933  
Liabilities and Stockholders’ Equity:                
                 
Liabilities:                
Noninterest-bearing demand deposits   $ 259,816     $ 211,900  
Savings, NOW and money-market deposits     300,907       278,355  
Time deposits     318,142       281,940  
                 
Total deposits     878,865       772,195  
                 
Federal Home Loan Bank advances     -       50,000  
Operating lease liabilities     2,661       2,774  
Other liabilities     6,253       4,780  
                 
Total liabilities     887,779       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, 11,751,082 and 11,636,092 shares issued and outstanding     118       116  
Additional paid-in capital     112,010       111,485  
Retained earnings (accumulated deficit)     4,625       (2,847 )
Accumulated other comprehensive loss     (5,405 )     (5,570 )
                 
Total stockholders’ equity     111,348       103,184  
Total liabilities and stockholders’ equity   $ 999,127     $ 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)

 

                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2025     2024     2025     2024  
Interest income:                                
Loans   $ 14,026     $ 12,948     $ 27,627     $ 24,784  
Debt securities     158       165       318       336  
Other     1,404       2,075       2,650       3,534  
                                 
Total interest income     15,588       15,188       30,595       28,654  
                                 
Interest expense:                                
Deposits     5,322       5,919       10,600       10,997  
Borrowings     24       527       327       1,164  
                                 
Total interest expense     5,346       6,446       10,927       12,161  
                                 
Net interest income     10,242       8,742       19,668       16,493  
                                 
Credit loss expense     1,040       195       875       1,253  
                                 
Net interest income after credit loss expense     9,202       8,547       18,793       15,240  
                                 
Noninterest income:                                
Service charges and fees     1,099       864       2,137       1,832  
Other     735       337       928       608  
                                 
Total noninterest income     1,834       1,201       3,065       2,440  
                                 
Noninterest expenses:                                
Salaries and employee benefits     3,738       3,031       7,119       5,879  
Professional fees     275       238       522       433  
Occupancy and equipment     294       202       576       408  
Data processing     625       575       1,158       1,129  
Regulatory assessment     202       231       400       352  
Other     1,047       807       2,032       1,591  
                                 
Total noninterest expenses     6,181       5,084       11,807       9,792  
                                 
Net earnings before income taxes     4,855       4,664       10,051       7,888  
                                 
Income taxes     1,253       1,168       2,579       2,015  
                                 
Net earnings   $ 3,602     $ 3,496     $ 7,472     $ 5,873  
                                 
Net earnings per share - Basic   $ 0.31     $ 0.36     $ 0.64     $ 0.68  
Net earnings per share - Diluted   $ 0.29     $ 0.34     $ 0.61     $ 0.66  

 

See accompanying notes to condensed consolidated financial statements.

 

2

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(Dollars in thousands)

 

                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2025     2024     2025     2024  
                         
Net earnings   $ 3,602     $ 3,496     $ 7,472     $ 5,873  
                                 
Other comprehensive (loss) income:                                
Change in unrealized (loss) gain on debt securities:                                
Unrealized (loss) gain arising during the period     (338 )     312       223       (201 )
Amortization of unrealized loss on debt securities transferred to held-to-maturity     -       1       (1 )     1  
                                 
Other comprehensive (loss) income before income taxes     (338 )     313       222       (200 )
Deferred income tax benefit (expense)     86       (67 )     (57 )     64  
                                 
Total other comprehensive (loss) income     (252 )     246       165       (136 )
                                 
Comprehensive income   $ 3,350     $ 3,742     $ 7,637     $ 5,737  

 

See accompanying notes to condensed consolidated financial statements.

 

3

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity

Three and Six Months Ended June 30, 2025 and 2024

(Dollars in thousands, except share amounts)

 

                                                                                 
                                           
                                  Accumulated        
    Preferred Stock                 Additional           Other        
    Series B     Series C     Common Stock     Paid-In     Retained     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Earnings     Loss     Equity  
                                                             
Balance at March 31, 2025 (unaudited)     1,360     $ -       525,641     $ -       11,751,082     $ 118     $ 112,015     $ 1,023     $ (5,153 )   $ 108,003  
Offering costs related to common stock ($5) (unaudited)     -       -       -       -       -       -       (5 )     -       -       (5 )
Net change in unrealized loss on debt securities available for sale (unaudited)     -       -       -       -       -       -       -       -       (252 )     (252 )
Net earnings (unaudited)     -       -       -       -       -       -       -       3,602       -       3,602  
Three months ended June 30, 2025 (unaudited)     -       -       -       -       -       -       (5 )     3,602       (252 )     3,345  
Balance at June 30, 2025 (unaudited)     1,360     $ -       525,641     $ -       11,751,082     $ 118     $ 112,010     $ 4,625     $ (5,405 )   $ 111,348  
Balance at December 31, 2024 (audited)     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 $21) (unaudited)     -       -       -       -       52,819       1       230       -       -       231  
Stock-based Compensation (unaudited)     -       -       -       -       62,171       1       295       -       -       296  
Net change in unrealized gain on debt securities available for sale (unaudited)     -       -       -       -       -       -       -       -       166       166  
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)     -       -       -       -       -       -       -       -       (1 )     (1 )
Net earnings (unaudited)     -       -       -       -       -       -       -       7,472       -       7,472  
Six months ended June 30, 2025 (unaudited)     -       -       -       -       114,990       2       525       7,472       165       8,164  
Balance at June 30, 2025 (unaudited)     1,360     $ -       525,641     $ -       11,751,082     $ 118     $ 112,010     $ 4,625     $ (5,405 )   $ 111,348  

 

(continued)

 

4

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity

Three and Six Months Ended June 30, 2025 and 2024

(Dollars in thousands, except share amounts)

 

                                                    Accumulated        
    Preferred Stock                 Additional           Other        
    Series B     Series C     Common Stock     Paid-In     Accumulated     Comprehensive     Stockholders’  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit     Loss     Equity  
                                                             
Balance at March 31, 2024 (unaudited)     1,360     $ -       525,641     $ -       9,634,821     $ 96     $ 102,239     $ (13,594 )   $ (5,697 )   $ 83,044  
Stock-based Compensation (unaudited)     -       -       -       -       42,610       -       185       -       -       185  
Net change in unrealized gain on debt securities available for sale (unaudited)     -       -       -       -       -       -       -       -       245       245  
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)     -       -       -       -       -       -       -       -       1       1  
Net earnings (unaudited)     -       -       -       -       -       -       -       3,496       -       3,496  
Three months ended June 30, 2024 (unaudited)     -       -       -       -       42,610       -       185       3,496       246       3,927  
Balance at June 30, 2024 (unaudited)     1,360     $ -       525,641     $ -       9,677,431     $ 96     $ 102,424     $ (10,098 )   $ (5,451 )   $ 86,971  
Balance at December 31, 2023 (audited)     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) (unaudited)     -       -       525,641       -       -       -       1,932       -       -       1,932  
Proceeds from sale of common stock (net of offering costs of $339) (unaudited)     -       -       -       -       2,311,552       23       8,780       -       -       8,803  
Stock-based Compensation (unaudited)     -       -       -       -       115,660       1       491       -       -       492  
Net change in unrealized loss on debt securities available for sale (unaudited)     -       -       -       -       -       -       -       -       (137 )     (137 )
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)     -       -       -       -       -       -       -       -       1       1  
Net earnings (unaudited)     -       -       -       -       -       -       -       5,873       -       5,873  
Six months ended June 30, 2024 (unaudited)     -       -       525,641       -       2,427,212       24       11,203       5,873       (136 )     16,964  
Balance at June 30, 2024 (unaudited)     1,360     $ -       525,641     $ -       9,677,431     $ 96     $ 102,424     $ (10,098 )   $ (5,451 )   $ 86,971  

 

See accompanying notes to condensed consolidated financial statements.

 

5

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

                 
    Six Months Ended  
    June 30,  
    2025     2024  
Cash flows from operating activities:                
Net earnings   $ 7,472     $ 5,873  
Adjustments to reconcile net earnings to net cash provided by operating activities:                
Credit loss expense     875       1,253  
Depreciation and amortization     217       116  
Deferred income tax benefit     (191 )     (57 )
Net accretion of fees, premiums and discounts     (65 )     (51 )
Stock-based compensation expense     296       492  
Decrease (increase) in accrued interest receivable     210       (520 )
Amortization of right-of-use lease assets     127       140  
Net decrease in operating lease liabilities     (113 )     (126 )
Increase in other assets     (1,033 )     (842 )
Increase (decrease) in other liabilities     1,497       (638 )
Net cash provided by operating activities     9,292       5,640  
                 
Cash flows from investing activities:                
Principal repayments of debt securities available for sale     556       551  
Principal repayments of debt securities held-to-maturity     22       46  
Net decrease (increase) in loans     19,663       (82,089 )
Purchases of premises and equipment     (581 )     (618 )
Redemption of FHLB stock     2,271       663  
Net cash provided by (used in) investing activities     21,931       (81,447 )
                 
Cash flows from financing activities:                
Net increase in deposits     106,670       123,065  
Net decrease in FHLB Advances     (50,000 )     (17,000 )
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 $21 and $339)     231       8,803  
Net cash provided by financing activities     56,901       103,200  
                 
Net increase in cash and cash equivalents     88,124       27,393  
                 
Cash and cash equivalents at beginning of the period     93,630       76,663  
                 
Cash and cash equivalents at end of the period   $ 181,754     $ 104,056  
                 
Supplemental disclosure of cash flow information:                
Cash paid during the period for:                
Interest   $ 9,305     $ 12,482  
                 
Income taxes   $ 2,424     $ 2,015  
                 
Noncash transactions:                
Net change in unrealized gain (loss) on debt securities available for sale, net of income taxes   $ 166     $ (137 )
                 
Amortization of unrealized loss on debt securities transferred to held to maturity   $ (1 )   $ 1  

 

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 June 30, 2025, the results of operations for the three-month and six-month periods ended June 30, 2025 and 2024, and cash flows for the six-month periods ended in June 30, 2025 and 2024. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six month periods ended June 30, 2025, are not necessarily indicative of the results to be expected for the full year of 2025.

 

Comprehensive Income. Generally Accepted Accounting Principles (“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

    June 30, 2025     December 31, 2024  
             
Unrealized loss on debt securities available for sale   $ (7,250 )   $ (7,473 )
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity     (11 )     (10 )
Income tax benefit     1,856       1,913  
                 
Accumulated other comprehensive loss   $ (5,405 )   $ (5,570 )

 

Recent Accounting Standards

 

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, “Improvements to Income Tax Disclosures.” ASU 2023-09 requires disclosure of specific categories in the income tax rate reconciliation and requires additional information for reconciling items that meet a quantitative threshold. The standard requires an annual disclosure of income taxes paid, net of refunds received, disaggregated by federal, state and foreign taxes and to disaggregate the information by jurisdiction based on a quantitative threshold. The standard is effective for fiscal years beginning after December 15, 2024. The adoption of this standard did not have a material impact on the Company’s disclosures.

 

In November 2024, the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures.” ASU 2024-03 requires disclosure to disaggregate prescribed expenses within relevant income statement captions. The standard is effective for fiscal years beginning after December 15, 2026 and for interim periods after December 15, 2027. Early adoption is permitted. The Company is evaluating the impact of the changes to its existing disclosures.

 

(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 June 30, 2025:                                
Available for sale:                                
SBA Pool Securities   $ 512     $ -     $ (12 )   $ 500  
Collateralized mortgage obligations     121       -       (14 )     107  
Taxable municipal securities     16,635       -       (4,654 )     11,981  
Mortgage-backed securities     12,360       -       (2,570 )     9,790  
Total   $ 29,628     $ -     $ (7,250 )   $ 22,378  
                                 
Held-to-maturity:                                
Collateralized mortgage obligations   $ 260     $ -     $ (28 )   $ 232  
Total   $ 260     $ -     $ (28 )   $ 232  

 

          Gross     Gross        
    Amortized     Unrealized     Unrealized     Fair  
    Cost     Gains     Losses     Value  
                         
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 June 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 six-month periods ended June 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 June 30, 2025:                        
Available for Sale:                                
SBA Pool Securities   $ (12 )   $ 500     $ -     $ -  
Collateralized mortgage obligation     (14 )     107       -       -  
Taxable municipal securities     (4,654 )     11,981       -       -  
Mortgage-backed securities     (2,570 )     9,790       -       -  
Total   $ (7,250 )   $ 22,378     $ -     $ -  

 

(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 June 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 June 30, 2025 and December 31, 2024 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of June 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

    June 30, 2025     December 31, 2024  
             
Residential real estate   $ 66,602     $ 74,064  
Multi-family real estate     68,321       64,001  
Commercial real estate     478,224       485,671  
Land and construction     61,126       77,295  
Commercial     50,351       52,810  
Consumer     59,940       50,399  
                 
Total loans     784,564       804,240  
                 
Deduct:                
Net deferred loan fees and costs     (678 )     (595 )
Allowance for credit losses     (9,338 )     (8,660 )
                 
Loans, net   $ 774,548     $ 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 June 30, 2025:                                                        
                                                         
Beginning balance (March 31, 2025)   $ 1,066     $ 915     $ 2,597     $ 2,021     $ 1,588     $ 83     $ 8,270  
Credit loss expense (reversal)     126       (157 )     288       (311 )     1,001       96       1,043  
Charge-offs     -       -       -       -       -       (72 )     (72 )
Recoveries     -       -       -       -       -       97       97  
Ending balance (June 30, 2025)   $ 1,192     $ 758     $ 2,885     $ 1,710     $ 2,589     $ 204     $ 9,338  
                                                         
Three Months Ended June 30, 2024:                                                        
                                                         
Beginning balance (March 31, 2024)   $ 971     $ 1,029     $ 4,108     $ 1,512     $ 234     $ 427     $ 8,281  
Credit loss (reversal) expense     (1 )     (317 )     195       165       (100 )     321       263  
Charge-offs     -       -       -       -       -       (440 )     (440 )
Recoveries     -       -       -       -       -       104       104  
Ending balance (June 30, 2024)   $ 970     $ 712     $ 4,303     $ 1,677     $ 134     $ 412     $ 8,208  

 

   

Residential

Real

Estate

    

Multi-

Family

Real Estate

    

Commercial

Real Estate

    

Land and

Construction

     Commercial     Consumer     Total  
Six Months Ended June 30, 2025:                                                        
                                                         
Beginning balance (December 31, 2024)   $ 1,114     $ 786     $ 2,705     $ 2,015     $ 1,675     $ 365     $ 8,660  
Credit loss expense (reversal)     78       (28 )     180       (305 )     914       60       899  
Charge-offs     -       -       -       -       -       (397 )     (397 )
Recoveries     -       -       -       -       -       176       176  
Ending balance (June 30, 2025)   $ 1,192     $ 758     $ 2,885     $ 1,710     $ 2,589     $ 204     $ 9,338  
                                                         
Six Months Ended June 30, 2024:                                                        
                                                         
Beginning balance (December 31, 2023)   $ 1,020     $ 1,041     $ 3,793     $ 1,019     $ 281     $ 529     $ 7,683  
Credit loss (reversal) expense     (50 )     (329 )     510       658       (130 )     735       1,394  
Charge-offs     -       -       -       -       (17 )     (1,058 )     (1,075 )
Recoveries     -       -       -       -       -       206       206  
Ending balance (June 30, 2024)   $ 970     $ 712     $ 4,303     $ 1,677     $ 134     $ 412     $ 8,208  

 

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

                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
(Dollars in thousands)   2025     2024     2025     2024  
Credit loss expense – funded   $ 1,043     $ 263     $ 899     $ 1,394  
Credit loss reversal- unfunded     (3 )     (68 )     (24 )     (141 )
Total credit loss expense   $ 1,040     $ 195     $ 875     $ 1,253  

 

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:

 

(continued)

 

10

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

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 June 30, 2025:                                                        
Residential real estate   $ -     $ -     $ -     $ -     $ 66,602     $ -     $ 66,602  
Multi-family real estate     -       -       -       -       68,321       -       68,321  
Commercial real estate     -       -       -       -       478,224       -       478,224  
Land and construction     -       -       -       -       61,126       -       61,126  
Commercial     -       -       -       -       47,737       2,614       50,351  
Consumer     115       82            -       197       59,138       605       59,940  
                                                         
Total   $ 115     $ 82     $ -     $ 197     $ 781,148     $ 3,219     $ 784,564  

 

    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 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 six-month periods ended June 30, 2025 and 2024.

 

The following table presents the amortized costs basis of loans on nonaccrual status, net of fees and costs as of June 30, 2025 and December 31, 2024. As of June 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

    June 30, 2025  
(Dollars in thousands)   Nonaccrual Without ACL    

Nonaccrual With

ACL

     Total Nonaccrual  
Commercial   $ 362     $ 2,252     $ 2,614  
Consumer     605            -       605  
Total   $ 967     $ 2,252     $ 3,219  

 

    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 June 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

    June 30, 2025  
(Dollars in thousands)   Real Estate     Other     Total  
Commercial   $ -     $ 2,614     $ 2,614  
Consumer     605       -       605  
Total   $ 605     $ 2,614     $ 3,219  

 

     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 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

Construction and land real estate  

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     Revolving Loans Converted to Term Loans        
(Dollars in thousands)   June 30, 2025     2024     2023     2022     2021     Prior    

(Amortized Cost Basis)

     (Amortized Cost Basis)     Total  
Residential real estate                                                                        
Pass   $ 3,148     $ 3,673     $ 21,231     $ 16,634     $ 10,881     $ 8,696     $ -     $ -     $ 64,263  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       1,855       -       484       -       -       2,339  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 3,148     $ 3,673     $ 21,231     $ 18,489     $ 10,881     $ 9,180     $ -     $      -     $ 66,602  
Current period Gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Multi-family real estate                                                                        
Pass   $ -     $ 4,979     $ 10,582     $ 26,499     $ 17,356     $ 8,905     $ -     $ -     $ 68,321  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ -     $ 4,979     $ 10,582     $ 26,499     $ 17,356     $ 8,905     $ -     $ -     $ 68,321  
Current period Gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 21,993     $ 69,075     $ 146,494     $ 170,429     $ 47,630     $ 21,441     $ -     $ -     $ 477,062  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       1,162       -       -       1,162  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 21,993     $ 69,075     $ 146,494     $ 170,429     $ 47,630     $ 22,603     $ -     $ -     $ 478,224  
Current period Gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Land and construction                                                                        
Pass   $ 13,233     $ 8,946     $ 27,168     $ 8,215     $ 880     $ 2,684     $ -     $ -     $ 61,126  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 13,233     $ 8,946     $ 27,168     $ 8,215     $ 880     $ 2,684     $ -     $ -     $ 61,126  
Current period Gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 22,207     $ 15,447     $ 7,122     $ 445     $ 197     $ 2     $ -     $ -     $ 45,420  
OLEM (Other Loans Especially Mentioned)     -       -       2,317       -       -       -       -       -       2,317  
Substandard     1,390       -       1,224       -       -       -       -       -       2,614  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 23,597     $ 15,447     $ 10,663     $ 445     $ 197     $ 2     $ -     $ -     $ 50,351  
Current period Gross write-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Consumer                                                                        
Pass   $ 390     $ 10     $ 2,242     $ 1,633     $ 820     $ 9     $ 54,231     $ -     $ 59,335  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       605       -       -       -       -       -       605  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 390     $ 10     $ 2,847     $ 1,633     $ 820     $ 9     $ 54,231     $ -     $ 59,940  
Current period Gross write-offs   $ -     $ -     $ (134 )   $ (254 )   $ (9 )   $ -     $ -     $ -     $ (397 )

 

(continued)

 

14

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Construction and land real estate  

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     Revolving Loans     Revolving Loans Converted to Term 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 six-month periods ended June 30, 2025 and 2024, the Company had 525,641 Series C Convertible Preferred 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.

 Schedule of Basic and Diluted Loss Per Share

    Three Months Ended     Six Months Ended  
    June 30,     June 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:                                                                                                
Net earnings   $ 3,602       11,751,082     $ 0.31     $ 3,496       9,639,503     $ 0.36     $ 7,472       11,727,974     $ 0.64     $ 5,873       8,627,904     $ 0.68  
Effect of conversion of series C preferred shares             525,641                       525,641                       525,641                       274,343          
Diluted EPS:                                                                                                
Net earnings   $ 3,602       12,276,723     $ 0.29     $ 3,496       10,165,144     $ 0.34     $ 7,472       12,253,615     $ 0.61     $ 5,873       8,902,247     $ 0.66  

 

(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 June 30, 2025, 861,488 shares remain available for grant.

 

During the six-month periods ended June 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 six-month period ended June 30, 2024, the Company issued 42,610 shares to a director and recorded compensation expense of $185,000.

 

(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 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 June 30, 2025:                                
SBA Pool Securities   $ 500     $ -     $ 500     $ -  
Collateralized mortgage obligations     107       -       107       -  
Taxable municipal securities     11,981       -       11,981       -  
Mortgage-backed securities     9,790       -       9,790       -  
Total   $ 22,378     $ -     $ 22,378     $ -  
                                 
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 June 30, 2025     At December 31, 2024  
    Carrying Amount     Fair Value     Level     Carrying Amount     Fair Value     Level  
                                     
Financial assets:                                                
Cash and cash equivalents   $ 181,754     $ 181,754       1     $ 93,630     $ 93,630       1  
Debt securities available for sale     22,378       22,378       2       22,773       22,773       2  
Debt securities held-to-maturity     260       232       2       281       247       2  
Loans     774,548       691,943       3       794,985       766,871       3  
Federal Home Loan Bank stock     658       658       3       2,929       2,929       3  
Accrued interest receivable     3,138       3,138       3       3,348       3,348       3  
                                                 
Financial liabilities:                                                
Deposit liabilities     878,865       866,058       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 June 30, 2025 follows (Dollars in thousands):

 Schedule of Off-Balance Sheet Risks of Financial Instruments

Commitments to extend credit   $ 13,450  
         
Unused lines of credit   $ 52,777  
         
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 June 30, 2025, and December 31, 2024, the Bank meets all capital adequacy requirements to which it is subject to. The Bank’s actual capital amounts and percentages are presented in the table (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 June 30, 2025:                                
Tier 1 Capital to Total Assets   $ 116,277       11.89 %   $ 88,011       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 June 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. Any such conversion is also subject to receipt of any required regulatory approvals by appropriate state and federal bank regulatory agencies.

 

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 June 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 six-month period ended June 30, 2025, the Company sold an additional 52,819 common stock shares under the ATM program, generating net proceeds of $231,000. 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.

 

(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 June 30, 2025, the Company had no outstanding borrowings from the Federal Home Loan Bank (“FHLB”). During the six month ended June 30, 2025, the Company borrowed $10 million from FHLB, which was fully repaid prior to period end. 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     June 30,     December 31,  
At June 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 June 30, 2025, the Company had credit availability of $244.3 million. At June 30, 2025, the Company had loans pledged with a carrying value of $458 million as collateral for FHLB advances.

 

In addition, the Bank has a line of credit with the Federal Reserve Bank which is secured by investment securities with fair value of $1.7 million as of June 30, 2025.

 

At June 30, 2025, the Company also had lines of credit amounting to $49.5 million with five correspondent banks to purchase federal funds. Disbursements on the lines are subject to the approval of correspondent banks. At June 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 footprint 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. We believe adding this talent and upgrading our core banking system 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 also 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, 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 in order 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 June 30, 2025 and December 31, 2024

 

Capital Levels

 

As of June 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.

 

Overview

 

The Company’s total assets increased by approximately $66.2 million to $999.1 million at June 30, 2025, from $932.9 million at December 31, 2024, primarily due to increases in cash and cash equivalents. Net loans decreased by $20.4 million to $774.5 million at June 30, 2025, from $794.9 million at December 31, 2024. Deposits grew by approximately $106.7 million to $878.9 million at June 30, 2025, from $772.2 million at December 31, 2024. Total stockholders’ equity increased by approximately $8.2 million to $111.3 million at June 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:

 

    Six Months Ended     Year Ended  
    June 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     11.1 %     11.1 %
                 
Return on average assets (1)     1.6 %     1.4 %
                 
Return on average equity (1)     13.9 %     7.3 %
                 
Noninterest expenses to average assets (1)     2.5 %     2.1 %

 

(1) Annualized for the six months ended June 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 investment 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 June 30, 2025.

 

The Company increased deposits by approximately $106.7 million during the six-month period ended June 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 $244.3 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 June 30, 2025, first mortgage loans with a carrying value of $458 million were pledged to FHLB. At June 30, 2025, the Company also had available lines of credit amounting to $49.5 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 June 30,  
    2025     2024  
          Interest     Average           Interest     Average  
    Average     and     Yield/     Average     and     Yield/  
(Dollars in thousands)   Balance     Dividends     Rate(5)     Balance     Dividends     Rate(5)  
Interest-earning assets:                                                
Loans   $ 803,171     $ 14,026       6.99 %   $ 753,726     $ 12,948       6.87 %
Securities     22,684       158       2.79 %     23,491       165       2.81 %
Other (1)     123,254       1,404       4.56 %     146,605       2,075       5.66 %
                                                 
Total interest-earning assets/interest income     949,109       15,588       6.57 %     923,822       15,188       6.58 %
                                                 
Cash and due from banks     12,833                       12,871                  
Premises and equipment     2,336                       1,729                  
Other     8,421                       7,091                  
                                                 
Total assets   $ 972,699                     $ 945,513                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 280,454     $ 1,742       2.48 %   $ 325,734     $ 2,550       3.13 %
Time deposits     330,118       3,580       4.34 %     258,325       3,369       5.22 %
Borrowings (2)     2,222       24       4.32 %     50,476       527       4.18 %
                                                 
Total interest-bearing liabilities/interest expense     612,794       5,346       3.49 %     634,535       6,446       4.06 %
                                                 
Noninterest-bearing demand deposits     241,457                       220,942                  
Other liabilities     8,502                       6,041                  
Stockholders’ equity     109,946                       83,995                  
                                                 
Total liabilities and stockholders’ equity   $ 972,699                     $ 945,513                  
                                                 
Net interest income           $ 10,242                     $ 8,742          
                                                 
Interest rate spread (3)                     3.08 %                     2.52 %
                                                 
Net interest margin (4)                     4.32 %                     3.79 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.55                       1.46                  

 

(1) Includes interest-earning deposits with banks and Federal Home Loan Bank stock 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)

 

    Six Months Ended June 30,  
    2025     2024  
          Interest     Average           Interest     Average  
    Average     and     Yield/     Average     and     Yield/  
(Dollars in thousands)   Balance     Dividends     Rate(5)     Balance     Dividends     Rate(5)  
Interest-earning assets:                                                
Loans   $ 800,008     $ 27,627       6.91 %   $ 730,202     $ 24,784       6.79 %
Securities     22,831       318       2.79 %     23,828       336       2.82 %
Other (1)     116,559       2,650       4.55 %     126,500       3,534       5.59 %
                                                 
Total interest-earning assets/interest income     939,398       30,595       6.51 %     880,530       28,654       6.51 %
                                                 
Cash and due from banks     13,504                       14,018                  
Premises and equipment     2,238                       1,602                  
Other     8,134                       6,272                  
                                                 
Total assets   $ 963,274                     $ 902,422                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 278,733       3,493       2.51 %   $ 322,360       4,906       3.04 %
Time deposits     321,117       7,107       4.43 %     229,791       6,091       5.30 %
Borrowings (2)     17,223       327       3.80 %     54,508       1,164       4.27 %
                                                 
Total interest-bearing liabilities/interest expense     617,073       10,927       3.54 %     606,659       12,161       4.01 %
                                                 
Noninterest-bearing demand deposits     230,330                       211,878                  
Other liabilities     8,102                       5,732                  
Stockholders’ equity     107,769                       78,153                  
                                                 
Total liabilities and stockholders’ equity   $ 963,274                     $ 902,422                  
                                                 
Net interest income           $ 19,668                     $ 16,493          
                                                 
Interest rate spread (3)                     2.97 %                     2.50 %
                                                 
Net interest margin (4)                     4.19 %                     3.75 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.52                       1.45                  

 

(1) Includes interest-earning deposits with banks and Federal Home Loan Bank stock 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 June 30, 2025, and 2024

 

    Three Months Ended     Increase /  
    June 30,     (Decrease)  
(Dollars in thousands, except per share amounts)   2025     2024     Amount     Percentage  
Total interest income   $ 15,588     $ 15,188     $ 400       3 %
Total interest expense     5,346       6,446       (1,100 )     (17 )%
Net interest income     10,242       8,742       1,500       17 %
Credit loss expense     1,040       195       845       433 %
Net interest income after credit loss expense     9,202       8,547       655       8 %
Total noninterest income     1,834       1,201       633       53 %
Total noninterest expenses     6,181       5,084       1,097       22 %
Net earnings before income taxes     4,855       4,664       191       4 %
Income taxes     1,253       1,168       85       7 %
Net earnings   $ 3,602     $ 3,496       106       3 %
Net earnings per share - Basic   $ 0.31     $ 0.36                  
Net earnings per share - Diluted   $ 0.29     $ 0.34                  

 

Net earnings. Net earnings for the three months ended June 30, 2025, were $3.6 million or $.31 per basic share and $.29 per diluted share compared to net earnings of $3.5 million or $.36 per basic share and $.34 per diluted share for the three months ended June 30, 2024. The increase in net earnings during the three months ended June 30, 2025 compared to three months ended June 30, 2024 is primarily attributed to an increase in net interest income and noninterest income.

 

Interest income. Interest income increased by $400,000 to $15.6 million for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 due primarily to increases 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 June 30, 2025, compared to the three months ended June 30, 2024, primarily due to reduction in deposit rates and repayment of borrowings, which lowered overall funding cost.

 

Credit loss expense. The Company recorded a credit loss expense of $1.0 million for the three months ended June 30, 2025, compared to a credit loss expense of $195,000 for the three months ended June 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 $9.3 million or 1.19% of loans outstanding at June 30, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. During the three-months ended June 30, 2025, the net recovery amounting to $25,000 resulted from consumer lending. The increase of $845,000 in credit loss expense was due to estimated collectability on loans individually analyzed.

 

Noninterest income. Total noninterest income was $1.8 million for the three months ended June 30, 2025, compared to $1.2 for the three months ended June 30, 2024. The increase reflects consistent performance in wire transfer and ACH fees during second quarter of 2025.

 

Noninterest expenses. Total noninterest expenses increased by $1.1 million to $6.2 million for the three months ended June 30, 2025, compared to $5.1 million for the three months ended June 30, 2024, primarily due to employee compensation and benefits, professional fees, and other expenses.

 

(continued)

 

25

 

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

 

Comparison of the six-month periods ended June 30, 2025, and 2024

 

    Six Months Ended     Increase /  
    June 30,     (Decrease)  
(Dollars in thousands, except per share amounts)   2025     2024     Amount     Percentage  
Total interest income   $ 30,595     $ 28,654     $ 1,941       7 %
Total interest expense     10,927       12,161       (1,234 )     (10 )%
Net interest income     19,668       16,493       3,175       19 %
Credit loss expense     875       1,253       (378 )     (30 )%
Net interest income after credit loss expense     18,793       15,240       3,553       23 %
Total noninterest income     3,065       2,440       625       26 %
Total noninterest expenses     11,807       9,792       2,015       21 %
Net earnings before income taxes     10,051       7,888       2,163       27 %
Income taxes     2,579       2,015       564       28 %
Net earnings   $ 7,472     $ 5,873       1,599       27 %
Net earnings per share - Basic   $ 0.64     $ 0.68                  
Net earnings per share - Diluted   $ 0.61     $ 0.66                  

 

Net earnings. Net earnings for the six months ended June 30, 2025, were $7.5 million or $.64 per basic share and $.61 per diluted share compared to net earnings of $5.9 million or $.68 per basic share and $.66 per diluted share for the six months ended June 30, 2024. The increase in net earnings during the six months ended June 30, 2025 compared to six months ended June 30, 2024 is primarily attributed to an increase in net interest income and non-interest income.

 

Interest income. Interest income increased by $1.9 million to $30.6 million for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 due primarily to growth in the average balances of interest earning assets.

 

Interest expense. Interest expense decreased by $1.2 million to $10.9 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to a reduction in deposit rates and changes in the composition of deposits.

 

Credit loss expense. Credit loss expense decreased by $378,000 to $875,000 for the six months ended June 30, 2025, compared to the six months ended June 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 $9.3 million or 1.19% of loans outstanding at June 30, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. Credit loss expense decreased by $378,000 for the six months ended June 30, 2025, was primarily due to improvements in the quality of the loan portfolio and the reassessment of the factors noted above. During the six-months ended June 30, 2025, the net charge off amounting to $221,000 resulted from consumer lending.

 

Noninterest income. Total noninterest income increased to $3.1 million for the six months ended June 30, 2025, compared to $2.4 million for the six months ended June 30, 2024, due to increased wire transfer and ACH fees during the six months ended June 30, 2025.

 

Noninterest expenses. Total noninterest expenses increased to $11.8 million for the six months ended June 30, 2025, compared to $9.8 million for the six months ended June 30, 2024, primarily due to employee compensation and benefits, 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 June 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: August 8, 2025 By: /s/ Timothy Terry
    Timothy Terry
    Principal Executive Officer
     
  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)
     
4.1   Bylaws (incorporated by reference from Current Report on Form 8-K filed with the SEC on May 11, 2004)
     
4.2   Description of Securities (incorporated by reference from Annual Report on Form 10-K filed with the SEC on February 26, 2025)
     
4.3   Form of stock certificate (incorporated by reference from Quarterly Report on Form 10-QSB filed with the SEC on August 12, 2004)
     
31.1   Certification of Principal Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
     
31.2   Certification of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
     
32.1   Certification of Principal Executive Officer
     
32.2   Certification of Chief Financial Officer
     
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 THE 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 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 Company 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 Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(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: August 8, 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 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, nor 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 Company 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 Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(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: August 8, 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 ADDED 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 June 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, as the Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

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

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: August 8, 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 ADDED 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 June 30, 2025, as filed with the Securities and Exchange Commission (the “Report”), I, as the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

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

 

  /s/ Elliot Nunez
  Elliot Nunez
  Chief Financial Officer
  Date: August 8, 2025