OPHC OptimumBank Holdings Inc

OptimumBank Holdings, Inc. (NASDAQ: OPHC) (“OptimumBank” or the “Company”) today reported strong financial performance for the second quarter of 2024. For the three months ended June 30, 2024, the Company achieved net income of $3.5 million, or $.36 per basic share and $0.34 per diluted share, compared to net income of $1.3 million, or $0.18 per basic and diluted share, for the same period in 2023. This reflects significant growth in both earnings and profitability year-over-year.

Key Financial Highlights:

Comparison of the Three-Month Periods Ended June 30, 2024, and 2023:

• Net interest income for the second quarter of 2024 reached $8.7 million, a remarkable increase of 56% from $5.6 million in the second quarter of 2023, driven by a 54% rise in average interest-earning assets.
• Net interest margin improved to 3.79%, up from 3.73% in the same quarter last year, illustrating enhanced yield on assets despite rising deposit costs.
• Noninterest income surged to $1.2 million for the second quarter of 2024, up 56% from $772,000 for the second quarter of 2023. This growth was primarily attributed to increased service charges and a notable rise in other noninterest income.
• Noninterest expenses increased by 30% to $5 million for the first quarter of 2024, driven by employee compensation and benefits, data processing, and other operating costs.

Asset and Deposit Growth:

• Gross loans expanded to $761.1 million as of June 30, 2024, an 12% increase from December 31, 2023, reflecting robust business growth. The allowance for credit losses increased to $8.2 million or 1.08% of loans outstanding at June 30, 2024, compared to $7.7 million or 1.13% of loans outstanding at December 31, 2023.
• Total deposits grew by 19% to $762.6 million. This increase was driven by a combination of higher noninterest-bearing demand deposits and an increase in time deposits.

Capital Position:

• Tier 1 capital to total assets ratio was 9.68% as of June 30, 2024, compared to 10.00% at the end of 2023, reflecting a solid capital base supporting continued growth.

Chairman of the Board Commentary

Moishe Gubin, Chairman of OptimumBank Holdings, Inc., stated, “Our strong financial performance in the second quarter of 2024 underscores the noteworthy progress we have made. Achieving net income of $3.5 million, or $.34 per diluted share, is a testament to our strategic focus and operational excellence. Our net interest income surged by 56% year-over-year, driven by an increase in average interest-earning assets. This growth reflects our strategic lending activity and careful management of interest rates and asset yields.”

“Despite the rising deposit costs, our net interest margin improved to 3.79%, up from 3.73% in the same period last year, illustrating our ability to enhance yield on assets. Noninterest income also saw a significant increase of 56% from the previous second quarter of 2023, bolstered by higher service charges and other noninterest income. These gains highlight our diversified revenue streams and strong operational performance.”

“We have made appropriate strides in expanding our loan portfolio, which grew by 11.9% to $761.1 million as of June 30, 2024. Our deposit growth of 19.2% to $762.6 million, particularly the notable 90.1% rise in time deposits, underscores our solid market position and trust among our customers.”

“Our capital position remains strong, with a Tier 1 capital to total assets ratio of 9.68%, providing a solid foundation for continued growth. As we move forward, we are confident in our ability to sustain this momentum and deliver long-term value to our shareholders. Our strategic initiatives, coupled with the ongoing support from stakeholders position us well for future success. Our ATM offering (“at-the market offering”) will become effective in the next couple of weeks through our designated agent and will allow the Company to continuously sell shares in the open market to fund our growth.”

Chairman Gubin’s comments align with the company’s reported financial performance and strategic achievements, emphasizing growth, operational efficiency, and a strong market position.

Net Interest Income and Net Interest Margin

Comparison of the Three-Month Periods Ended June 30, 2024, and 2023

(Dollars in thousands)	June 30, 2024			June 30, 2023			% Change
Average interestEarning assets	$	923,822		$	599,550		54.1	%
Net interest income	$	8,742		$	5,592		56.3	%
Net interest margin		3.79	%		3.73	%	6 bps

Net interest income for the second quarter of 2024 was $8.7 million, a 56.3% increase from $5.6 million in the second quarter of 2023. This growth was primarily driven by a rise in average interest-earning assets, which increased by 54.1% from the previous year, contributing to higher net interest income. The increase in net interest income was more than sufficient to offset the impact of higher interest-bearing deposit costs.

Compared to the first quarter of 2024, net interest income was 12.8% higher, reflecting changes in asset yields and deposit costs. The net interest margin for the second quarter of 2024 was 3.79%, up from 3.73% in the second quarter of 2023. This improvement was due to the growth in average interest-earning assets and more favorable yields, despite the rising costs of interest-bearing deposits.

Noninterest Income

Three Months and Six Months Ended June 30 2024, and 2023

(Dollars in thousands)	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Service charges and fees	$	864	$	759	$	1,832	$	1,478
Other	$	337	$	13	$	608	$	23
Total noninterest income	$	1,201	$	772	$	2,440	$	1,501

Noninterest income for the second quarter of 2024 was $1.2 million, a 55.6% increase from $772,000 in the first quarter of 2024. The increase was primarily driven by higher service charges and fees, which rose to $864,000 from $759,000 in the previous quarter. Additionally, there was a significant increase in other noninterest income, which rose to $337,000 from $13,000 in the first quarter of 2024 from the sale of the guaranteed portion of U.S. Small Business Administration (“SBA”) SBA 7A loans.

Noninterest Expense

Three Months and Six Months Ended June 30 2024, and 2023

(Dollars in thousands)	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023		Six Months Ended June 30, 2024		Six Months Ended June 30, 2023
Salaries and employee benefits	$	3,031	$	2,041	$	5,879	$	4,007
Professional fees	$	238	$	171	$	433	$	368
Occupancy and equipment	$	202	$	188	$	408	$	377
Data processing	$	575	$	385	$	1,129	$	751
Regulatory assessment	$	231	$	224	$	352	$	433
Litigation Settlement		—	$	375		—	$	375
Other	$	807	$	518	$	1,591	$	1,013
Total noninterest expenses	$	5,084	$	3,902	$	9,792	$	7,324

Noninterest expense for the second quarter of 2024 was $5.1 million, an increase of 30.1% from $3.9 million in the first quarter of 2024. This change was mainly driven by an increase in employee compensation and benefits, data processing costs, and professional fees. There was no litigation settlement expense during 2024.

Compared to the second quarter of 2023, noninterest expenses increased by 30% to $5.1 million from $3.9 million. This rise was mainly due to higher data processing costs and an increase in other operating expenses, including a significant rise in salaries and employee benefits.

Deposits

Deposits Summary

Condensed Consolidated Balance Sheets

(Dollars in thousands)	June 30, 2024		December 31, 2023		% Change June 30, 2024, vs. December 31, 2023
Total Deposits	$	762,646	$	639,581	19.2	%
Noninterest-bearing demand deposits	$	230,947	$	194,892	18.5	%
Savings, NOW, and money-market deposits	$	300,378	$	322,932	-7.0	%
Time deposits	$	231,321	$	121,757	90.1	%

Six Months Ended June 30 2024, and 2023

(Dollars in thousands)		2024		2023	% Change
Net Increase in Deposits	$	123,065	$	43,732	181.2	%

Interest Rates on Deposits

(Dollars in thousands)	Three Months Ended June 30, 2024		Three Months Ended June 30, 2023
Interest-bearing Deposits:
Savings, NOW, and money-market deposits averages	$	325,734	$	129,890
Interest Expense on Savings, NOW, and money-market deposits	$	2,550	$	395
Time Deposits averages	$	258,325	$	229,376
Interest Expense on Time Deposits	$	3,369	$	2,161
Total Interest-bearing Deposits averages	$	634,535	$	369,596
Total Interest Expense on Deposits	$	5,919	$	2,556

Deposit Composition

(Percentage of Total Deposits)	June 30, 2024		December 31, 2023
Uninsured Deposits to Total Deposits	27.4	%	44.1	%
Noninterest Deposits to Total Deposits	30.3	%	30.5	%

Total deposits were $762.6 million on June 30, 2024, up from $639.6 million on December 31, 2023, representing a 19.2% increase. This growth was driven by an 18.5% increase in noninterest-bearing demand deposits, which rose to $230.9 million from $194.9 million. Savings, NOW, and money-market deposits decreased by 7.0% to $300.4 million from $322.9 million. Time deposits saw a significant rise of 90.1%, reaching $231.3 million from $121.8 million. The net increase in deposits for the first half of 2024 was $123.1 million, up 181.2% compared to the $43.7 million increase in the same period in 2023. Interest-bearing deposits, comprising savings, NOW, money-market deposits, and time deposits, totaled $639.5 million, with an interest expense of $5.9 million for the three months ended June 30, 2024. Uninsured deposits made up 27.4% of total deposits on June 30, 2024, compared to 44.1% on December 31, 2023. Noninterest deposits accounted for 30.3% of total deposits, down from 30.5% at the end of 2023.

Capital

Capital Requirements to be Well Capitalized

Date	Tier 1 Capital to Total Assets		%
June 30, 2024	$	92,135	9.68	%
December 31, 2023	$	74,999	10.00	%

As of June 30, 2024, the Tier 1 capital to total assets ratio was 9.68%, representing a Tier 1 capital amount of $92,135. This is a slight decrease from December 31, 2023, when the ratio was 10.00% with Tier 1 capital of $74,999.

About OptimumBank Holdings, Inc.

OptimumBank Holdings, Inc. operates as the bank holding company for OptimumBank that provides a range of consumer and commercial banking services to individuals and businesses.

The company accepts demand interest-bearing and noninterest-bearing savings, money market, NOW and time deposit accounts, as well as certificates of deposit; and offers residential and commercial real estate, commercial, and consumer loans, as well as lending lines for working capital needs. It also provides debit and ATM cards; investment, cash management, and notary and night depository services; and direct deposits, money orders, cashier’s checks, domestic collections, drive-in tellers, and banking by mail, as well as Internet banking services. In addition, the company engages in holding, managing, and disposal of foreclosed real estate. It operates through banking offices located in Broward County, Florida. OptimumBank Holdings, Inc. was founded in 2000 and is based in Fort Lauderdale, Florida.

Safe Harbor Statement:

This press release contains forward-looking statements that can be identified by terminology such as “believes,” “expects,” “potential,” “plans,” “suggests,” “may,” “should,” “could,” “intends,” or similar expressions. Many forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results or implied by such statements. These factors include, but are not limited to, our limited operating history, managing our expected growth, risks associated with integration of acquired websites, possible inadvertent infringement of third-party intellectual property rights, our ability to effectively compete, our acquisition strategy, and a limited public market for our common stock, among other risks. OptimumBank Holdings, Inc.’s future results may also be impacted by other risk factors listed from time-to-time in its SEC filings. Many factors are difficult to predict accurately and are generally beyond the company’s control. Forward looking statements speak only as to the date they are made and OptimumBank Holdings, Inc. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.

Investor Relations & Corporate RelationsContact: Seth DenisonTelephone: (305) 401-4140 / SDenison@OptimumBank.com

Select Financial Data

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

		June 30,				December 31,
		2024				2023
			(Unaudited)				(audited)
Assets:
Cash and due from banks		$	11,923			$	14,009
Interest-bearing deposits with banks			92,133				62,654
Total cash and cash equivalents			104,056				76,663
Debt securities available for sale			23,540				24,355
Debt securities held-to-maturity (fair value of $280 and $326)			315				360
Loans, net of allowance for credit losses of $8,208 and $7,683			751,903				671,094
Federal Home Loan Bank stock			2,691				3,354
Premises and equipment, net			1,877				1,375
Right-of-use lease assets			2,021				2,161
Accrued interest receivable			2,994				2,474
Deferred tax asset			3,024				2,903
Other assets			7,357				6,515
Total assets		$	899,778			$	791,254
Liabilities and Stockholders’ Equity:
Liabilities:
Noninterest-bearing demand deposits		$	230,947			$	194,892
Savings, NOW and money-market deposits			300,378				322,932
Time deposits			231,321				121,757
Total deposits			762,646				639,581
Federal Home Loan Bank advances			45,000				62,000
Federal Reserve Bank advances			—				13,600
Operating lease liabilities			2,122				2,248
Other liabilities			3,039				3,818
Total liabilities			812,807				721,247
Commitments and contingencies (Notes 8 and 11)
Stockholders’ equity:
Preferred stock, no par value 6,000,000 shares authorized:			—				—
Series A Preferred, no par value, no shares issued and outstanding			—				—
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 and 0 shares authorized, 525,641 and 0 shares issued and outstanding			—				—
Common stock, $.01 par value; 30,000,000 shares authorized, 9,677,431 and 7,250,218 shares issued and outstanding			96				72
Additional paid-in capital			102,424				91,221
Accumulated deficit			(10,098	)			(15,971	)
Accumulated other comprehensive loss			(5,451	)			(5,315	)
Total stockholders’ equity			86,971				70,007
Total liabilities and stockholders’ equity		$	899,778			$	791,254

Condensed Consolidated Statements of Earnings (Unaudited)(in thousands, except per share amounts)

		Three Months Ended
		June 30,
		2024				2023
Interest income:
Loans		$	12,948			$	7,252
Debt securities			165				172
Other			2,075				755
Total interest income			15,188				8,179
Interest expense:
Deposits			5,919				2,556
Borrowings			527				31
Total interest expense			6,446				2,587
Net interest income			8,742				5,592
Credit loss expense			195				704
Net interest income after credit loss expense			8,547				4,888
Noninterest income:
Service charges and fees			864				759
Other			337				13
Total noninterest income			1,201				772
Noninterest expenses:
Salaries and employee benefits			3,031				2,041
Professional fees			238				171
Occupancy and equipment			202				188
Data processing			575				385
Regulatory assessment			231				224
Litigation Settlement			—				375
Other			807				518
Total noninterest expenses			5,084				3,902
Net earnings before income taxes			4,664				1,758
Income taxes			1,168				446
Net earnings		$	3,496			$	1,312
Net earnings per share - Basic		$	0.36			$	0.18
Net earnings per share - Diluted			0.34			$	0.18

Condensed Consolidated Statements of Comprehensive Income (Unaudited)(In thousands)

		Three Months Ended
		June 30,
		2024				2023
Net earnings		$	3,496			$	1,312
Other comprehensive income (loss):
Change in unrealized loss on debt securities:
Unrealized gain (loss) arising during the period			312				(380	)
Amortization of unrealized loss on debt securities transferred to held-to-maturity			1				1
Other comprehensive income (loss) before income taxes			313				(379	)
Deferred income tax (provision) benefit			(67	)			91
Total other comprehensive income (loss)			246				(288	)
Comprehensive income		$	3,742			$	1,024