OptimumBank Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
OPHC$8.83+1.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001493152-24-030217
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001493152-24-044211
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 42 previous paragraphs and 40 current paragraphs.
21 unchanged; 18 reworded; 1 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 7 previous and 7 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (1)
Current report
(1) Annualized for the nine months ended September 30, 2024.
Removed paragraphs (3)
Previous report
(1) Annualized for the six months ended June 30, 2024.
Previous report
The Company increased deposits by approximately $123 million during the six-month period ended June 30, 2024. The proceeds were primarily used to originate new loans. This growth was predominantly in the first quarter, similar to the growth in assets and loans.
Previous report
In addition to obtaining funds from depositors, the Company may borrow funds from other financial institutions. At June 30, 2024, the Company had outstanding borrowings of $45 million, against its $235 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. At June 30, 2024, the Company also had available lines of credit amounting to $29.5 million with six correspondent banks to purchase federal funds. Disbursements on the lines of credit are subject to the approval of the correspondent banks. We measure and monitor our liquidity daily and believe our liquidity sources are adequate to meet our operating needs.
Reworded paragraphs (18)
Previous wording
During the third quarter, we intend to continue to limit our growth in loans and other illiquid assets. Therefore, we do not expect a material increase in our loan balances during the coming quarter. However, we expect to continue our focus on originating multi-family, non-owner occupied, commercial real estate, and skilled nursing receivable facility loans. As to deposits, we are focused on increasing our on-balance sheet liquidity by identifying deposit growth opportunities among our existing customer base and prospects throughout Florida and the United States. With respect to treasury management, our 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 to achieve this end.
Current wording
Presently, we intend to continue to limit our growth in loans and other illiquid assets. Therefore, we do not expect a material increase in our loan balances during the coming quarter. However, we expect to continue focus any loan growth on originating multi-family, non-owner occupied, commercial real estate, and skilled nursing receivable facility loans. As to deposits, we are focused on increasing our on-balance sheet liquidity by identifying deposit growth opportunities among our existing customer base and prospects throughout Florida and the United States. With respect to treasury management, our 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 to achieve this end.
Previous wording
During the six-month period ended June 30, 2024, the Bank commenced offering U.S. Small Business Administration (“SBA”) SBA 7A loans. SBA 7A loans are generally used to establish a new business or assist in the acquisition, operation, or expansion of an existing business. With SBA loan programs, there are set eligibility requirements and underwriting standards outlined by SBA that can change as the government alters its fiscal policy. These loans are generally secured by accounts receivable, inventory, equipment, and real estate. The Bank hired two full-time SBA staff. At June 30, 2024, SBA 7A loans amounted to $2.7 million. The Bank sells the guaranteed portion of the SBA loans.
Current wording
During the nine-month period ended September 30, 2024, the Bank commenced offering U.S. Small Business Administration (“SBA”) SBA 7A loans. SBA 7A loans are generally used to establish a new business or assist in the acquisition, operation, or expansion of an existing business. With SBA loan programs, there are set eligibility requirements and underwriting standards outlined by SBA that can change as the government alters its fiscal policy. These loans are generally secured by accounts receivable, inventory, equipment, and real estate. The Bank hired two full-time SBA staff. At September 30, 2024, SBA 7A loans amounted to $4.7 million. The Bank sells the guaranteed portion of the SBA loans.
Previous wording
The Company opened its third location in North Miami Beach on July 8, 2024.
Current wording
The Company opened its third branch office in North Miami Beach on July 8, 2024.
Previous wording
The Company’s total assets increased by approximately $109 million to $900 million at June 30, 2024, from $791 million at December 31, 2023, primarily due to increases in loans, and cash and cash equivalents. The growth in assets was attributable to the success of the Company’s efforts to increase loans and deposits from new customers, predominantly in the first quarter. Net loans grew by $81 million to $752 million at June 30, 2024, from $671 million at December 31, 2023. Deposits grew by approximately $123 million to $763 million at June 30, 2024, from $640 million at December 31, 2023. Total stockholders’ equity increased by approximately $17 million to $87 million at June 30, 2024, from $70 million at December 31, 2023, primarily due to net earnings and proceeds from common and preferred stock sales, partially offset by changes in unrealized losses on debt securities available for sale.
Current wording
The Company’s total assets increased by approximately $154 million to $945 million at September 30, 2024, from $791 million at December 31, 2023, primarily due to increases in loans, and cash and cash equivalents. The growth in assets was attributable to the success of the Company’s efforts to increase loans and deposits from new customers, predominantly in the first quarter. Net loans grew by $98 million to $769 million at September 30, 2024, from $671 million at December 31, 2023. Deposits grew by approximately $167 million to $807 million at September 30, 2024, from $640 million at December 31, 2023. Total stockholders’ equity increased by approximately $23 million to $93 million at September 30, 2024, from $70 million at December 31, 2023, primarily due to net earnings and proceeds from common and preferred stock sales, and changes in unrealized losses on debt securities available for sale.
Previous wording
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 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.
Current wording
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 liquidity position may consist of cash on hand, cash on demand deposit with correspondent banks, federal funds sold, and unpledged marketable securities such as municipal securities, U.S. agency mortgage-backed securities, and asset-backed securities.
Previous wording
Net earnings. Net earnings for the three months ended June 30, 2024, were $3.5 million or $.36 per basic share and $.34 per diluted share compared to net earnings of $1.3 million or $.18 per basic and diluted share for the three months ended June 30, 2023. The increase in net earnings during the three months ended June 30, 2024 compared to three months ended June 30, 2023 is primarily attributed to an increase in net interest income and non-interest income, partially offset by the increase in interest expense and non-interest expense.
Current wording
Net earnings. Net earnings for the three months ended September 30, 2024, were $3.3 million or $.34 per basic share and $.32 per diluted share compared to net earnings of $1.3 million or $.18 per basic and diluted share for the three months ended September 30, 2023. The increase in net earnings during the three months ended September 30, 2024 compared to three months ended September 30, 2023 is primarily attributed to an increase in net interest income and non-interest income, partially offset by the increase in interest expense and non-interest expense.
Previous wording
Interest income. Interest income increased $13 million to $29 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 due primarily to growth in the loan portfolio and increases in yields on interest earning assets.
Current wording
Interest income. Interest income increased $6.4 million to $15.3 million for the three months ended September 30, 2024 compared to interest income of $8.9 million for the three months ended September 30, 2023 due primarily to growth in the loan portfolio and increases in yields on interest earning assets.
Previous wording
***Interest expense.***Interest expense increased $4 million to $6 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to interest bearing deposit rates and changes in the composition and volume of deposits.
Current wording
***Interest expense.***Interest expense increased $3.4 million to $6.4 million for the three months ended September 30, 2024, compared to interest expense of $3.0 million for the three months ended September 30, 2023, primarily due to interest bearing deposit rates and changes in the composition and volume of deposits.
Previous wording
Credit loss expense. Expected credit loss expense was $195,000 for the three months ended June 30, 2024, compared to $704,000 for the three months ended June 30, 2023. 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 us, 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 $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. The increase in the credit loss expense during the second quarter of 2024 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the three-months ended June 30, 2024, the net charge offs amounting to $336,000 arose mostly due to consumer lending for the three-month ended June 30, 2024.
Current wording
Credit loss expense. Expected credit loss expense was $357,000 for the three months ended September 30, 2024, compared to $1.4 million for the three months ended September 30, 2023. 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 us, 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 $8.3 million or 1.07% of loans outstanding at September 30, 2024, compared to$7.7 million or 1.13% of loans outstanding at December 31, 2023. The decrease in the credit loss expense during the third quarter of 2024 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the three-months ended September 30, 2024, the net charge offs amounting to $280,000 arose mostly due to consumer lending for the three-month ended September 30, 2024.
Previous wording
Noninterest income. Total noninterest income increased $429,000 to $1.2 million for the three months ended June 30, 2024, from $772,000 for the three months ended June 30, 2023, due to increased wire transfer and ACH fees during second quarter of 2024.
Current wording
Noninterest income. Total noninterest income increased $204,000 to $1.1 million for the three months ended September 30, 2024, from $911,000 for the three months ended September 30, 2023, due to increased wire transfer and ACH fees during Third quarter of 2024.
Previous wording
Noninterest expenses. Total noninterest expenses increased $1.2 million to $5 million for the three months ended June 30, 2024, compared to $3.9 million for the three months ended June 30, 2023, primarily due to employee compensation and benefits, data processing, and other operating costs.
Current wording
Noninterest expenses. Total noninterest expenses increased $1.6 million to $5.3 million for the three months ended September 30, 2024, compared to $3.7 million for the three months ended September 30, 2023, primarily due to employee compensation and benefits, data processing, and other operating costs.
Previous wording
Comparison of the Six-Month Periods Ended June 30, 2024, and 2023
Current wording
Comparison of the Nine-Month Periods Ended September 30, 2024, and 2023
Previous wording
Net earnings. Net earnings for the six months ended June 30, 2024, were $5.9 million or $.68 per basic share and $.66 per diluted share compared to net earnings of $2.5 million or $.34 per basic and diluted share for the six months ended June 30, 2023. The increase in net earnings during the six months ended June 30, 2024 compared to six months ended June 30, 2023 is primarily attributed to an increase in net interest income and non-interest income, partially offset by the increase in interest expense and non-interest expense.
Current wording
Net earnings. Net earnings for the nine months ended September 30, 2024, were $9.2 million or $1.02 per basic share and $.98 per diluted share compared to net earnings of $3.7 million or $.52 per basic and diluted share for the nine months ended September 30, 2023. The increase in net earnings during the nine months ended September 30, 2024 compared to nine months ended September 30, 2023 is primarily attributed to an increase in net interest income and non-interest income, partially offset by the increase in interest expense and non-interest expense.
Previous wording
Interest income. Interest income increased $7 million to $15 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 due primarily to growth in the loan portfolio and increases in yields on interest earning assets.
Current wording
Interest income. Interest income increased $19.4 million to $44 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 due primarily to growth in the loan portfolio and increases in yields on interest earning assets.
Previous wording
***Interest expense.***Interest expense increased $7 million to $12 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily due to an increase in deposit rates and changes in the composition of deposits and increase in the average balances.
Current wording
***Interest expense.***Interest expense increased $10.5 million to $18.5 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily due to an increase in deposit rates and changes in the composition of deposits and increase in the average balances.
Previous wording
Credit loss expense. Expected credit loss expense decreased $271,000 to $1.3 million for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, 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 $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. The increase in the credit loss expense during the second quarter of 2024 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the six-months ended June 30, 2024, the net charge off amounting to $869,000 resulted from consumer lending.
Current wording
Credit loss expense. Expected credit loss expense decreased $1.4 million to $1.6 million for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, 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 $8.3 million or 1.07% of loans outstanding at September 30, 2024, compared to $7.7 million or 1.13% of loans outstanding at December 31, 2023. The decrease in the credit loss expense during the third quarter of 2024 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the nine-months ended September 30, 2024, the net charge off amounting to $1.1 million resulted from consumer lending.
Previous wording
Noninterest income. Total noninterest income increased to $2.4 million for the six months ended June 30, 2024, from $1.5 million for the six months ended June 30, 2023, due to increased wire transfer and ACH fees during second quarter of 2024.
Current wording
Noninterest income. Total noninterest income increased to $3.6 million for the nine months ended September 30, 2024, from $2.4 million for the nine months ended September 30, 2023, due to increased wire transfer and ACH fees.
Previous wording
Noninterest expenses. Total noninterest expenses increased to $9.8 million for the six months ended June 30, 2024, compared to $7.3 million for the six months ended June 30, 2023, primarily due to employee compensation and benefits, and data processing.
Current wording
Noninterest expenses. Total noninterest expenses increased $4.1 million to $15.1 million for the nine months ended September 30, 2024, compared to $11.0 million for the nine months ended September 30, 2023, primarily due to employee compensation and benefits, and data processing.