OptimumBank Holdings Inc
For the period ended Dec 31, 2024. Filed Feb 26, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 26, 2025
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-K
Period ended 2023-12-31; filed 2024-03-08.
0001493152-24-009360
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-26.
0001493152-25-008332
Item 7. 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 75 previous paragraphs and 75 current paragraphs.
57 unchanged; 17 reworded; 1 added; 1 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 21 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
Net earnings. The Company had net earnings of $13.1 million for the year ended December 31, 2024 compared to net earnings of $6.3 million for the year ended December 31, 2023. The growth was primarily driven by a $10.9 million increase in net interest income, partially offset by $4.8 million rise in non-interest expenses. Additionally, the Company recognized a $1.8 million decrease in credit loss expense.
Removed paragraphs (1)
Previous report
Net earnings. The Company had net earnings of $6.3 million for the year ended December 31, 2023 compared to a net earnings of $4.0 million for the year ended December 31, 2022. Adversely affecting net income was the Company recording a credit loss expense amounting to $4.0 million during the year ended December 31, 2023, which was largely due to the growth in the loan portfolio of $196.7 million. This compared to the Company recording a credit loss expense amounting to $3.5 million during the year ended December 31, 2022.
Reworded paragraphs (17)
Previous wording
The Bank’s primary business is making business loans. This activity may subject the Bank to potential credit losses, the magnitude of which depends on a variety of economic factors affecting borrowers which are beyond its control. As of December 31, 2023, the Bank’s nonperforming loans were approximately $1 million, or .15% of gross loan portfolio. At December 31, 2022, the Bank had not no nonperforming loans.
Current wording
The Bank’s primary business is making business loans. This activity may subject the Bank to potential credit losses, the magnitude of which depends on a variety of economic factors affecting borrowers which are beyond its control. As of December 31, 2024, the Bank’s nonperforming loans were approximately $7.5 million, or 0.9% of gross loan portfolio.
Previous wording
The allowance for credit losses represents management’s estimate of expected losses in the existing loan portfolio. The allowance for credit losses is increased by the credit loss expense charged to earnings and reduced by loans charged off, net of recoveries. The allowance for credit losses represented 1.13% and 1.20% of the total loans outstanding at December 31, 2023, and 2022, respectively.
Current wording
The allowance for credit losses represents management’s estimate of expected losses in the existing loan portfolio. The allowance for credit losses is increased by the credit loss expense charged to earnings and reduced by loans charged off, net of recoveries. The allowance for credit losses represented 1.08% and 1.13% of the total loans outstanding at December 31, 2024, and 2023, respectively.
Previous wording
The Bank also has external sources of funds through the FHLB and with unsecured lines of credit with correspondent banks and the Federal Reserve. The Bank is a member of the FHLB, which allows it to borrow funds under a pre-arranged line of credit. As of December 31, 2023, the Bank had outstanding borrowings of $62 million against its $178 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. The Company also has a $13.6 million advance with the Federal Reserve that matures in August 2024. At December 31, 2023, the Company also had available lines of credit amounting to $29.5 million with five 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.
Current wording
The Bank also has external sources of funds through the FHLB and with unsecured lines of credit with correspondent banks and the Federal Reserve. The Bank is a member of the FHLB, which allows it to borrow funds under a pre-arranged line of credit. As of December 31, 2024, the Bank had outstanding borrowings of $50 million against its $236 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. In addition, the Bank has access to the Federal Reserve Discount Window as supplemental source of liquidity. As of December 31, 2024, the Bank had pledged $1.8 million in securities as collateral to secure this borrowing facility, providing a line of credit available for use if needed. At December 31, 2024, the Company also had available lines of credit amounting to $30.5 million with five correspondent banks to purchase federal funds. Disbursements on these lines of credit are subject to the approval of the correspondent banks. The Company measure and monitor our liquidity daily and believes its sources of funding are adequate to meet our operating needs.
Previous wording
The following table sets forth the maturity or repricing of loans by interest type at December 31, 2023 (in thousands):
Current wording
The following table sets forth the maturity of loans by interest type at December 31, 2024 (in thousands):
Previous wording
Deposits traditionally are the primary source of funds for the Company’s use in lending, making investments and meeting liquidity demands. The Company has focused on raising time deposits primarily within its market area, which is the area of Broward, Miami-Dade, Palm Beach, Martin, and St. Lucie counties. However, the Company offers a variety of deposit products, which are promoted within its market area. Deposits increased $132 million in 2023. The increase in deposit balances primarily consisted of an increase of $36 million in noninterest-bearing demand deposits, increase of $156 million in money market accounts, and an increase of $59 million in NOW deposits. These increases were partially offset by a decrease of $1 million in savings, decrease of $118 in time deposits. The increase in money market consisted of $105 million in deposits sourced through an online listing service and $51 million in deposits from competitive offerings at our branch offices.
Current wording
Deposits traditionally are the primary source of funds for the Company’s use in lending, making investments and meeting liquidity demands. The Company has focused on raising time deposits primarily within its market area, which is the area of Broward, Miami-Dade, Palm Beach, Martin, and St. Lucie counties. The Company offers a variety of deposit products, such as mobile banking, remote deposit capture and bank-to-bank ACH, which are promoted within its market area. Deposits increased $133 million in 2024. The increase in deposit balances primarily consisted of an increase of $17 million in noninterest-bearing demand deposits and increase of $160 million in time deposits. These increases were partially offset by a decrease of $23 million in NOW accounts, a decrease of $22 million in money market accounts, and a decrease of $23,000 in savings.
Previous wording
The Company uses the listing services from QwickRate, National CD RateLine and Raisin. None of the deposits obtained from the listing services are considered brokered deposits. At December 31, 2023 and 2022, listing service deposits comprised 22% and 32% of total deposits, respectively.
Current wording
The Company uses the listing services from QwickRate, National CD RateLine and Raisin. None of the deposits obtained from the listing services are considered brokered deposits. In addition, during the year ended December 31, 2024 the Company added a brokered certificate of deposit (CD) as part of its funding strategy. This brokered CD is classified as brokered deposit. Non-maturity reciprocal deposits are also included as brokered deposits. At December 31,2024 brokered deposits comprised 19% of total deposits none at December 31, 2023, and listing service deposits comprised 14% and 22% of total deposits, respectively.
Previous wording
The Company’s profitability depends primiarlly on net interest income, which is the difference between the interest received on earning assets, such as loans and securities, and the interest paid on interest-bearing liabilities, principally deposits and borrowings. Net interest income is determined by the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest-rate spread”) and the relative amounts of interest-earning assets and interest-bearing liabilities. The Company’s interest-rate spread is affected by regulatory, economic, and competitive factors that influence interest rates, loan demand, and deposit flows. The Company’s results of operations are also affected by the provision for loan losses, operating expenses such as salaries and employee benefits, occupancy and other operating expenses including income taxes, and noninterest income such as loan prepayment fees.
Current wording
The Company’s profitability depends primarily on net interest income, which is the difference between the interest received on earning assets, such as loans and securities, and the interest paid on interest-bearing liabilities, principally deposits and borrowings. Net interest income is determined by the difference between yields earned on interest-earning assets and rates paid on interest-bearing liabilities (“interest-rate spread”) and the relative amounts of interest-earning assets and interest-bearing liabilities. The Company’s interest-rate spread is affected by regulatory, economic, and competitive factors that influence interest rates, loan demand, and deposit flows. The Company’s results of operations are also affected by credit loss expense, operating expenses such as salaries and employee benefits, occupancy and other operating expenses including income taxes, and noninterest income such as loan prepayment fees.
Previous wording
The Company’s total assets at December 31, 2023, were $791 million, an increase of $206 million from December 31, 2022. The increase primarily consisted of increases of $5 million in cash and cash equivalents, $194 million in net loans, and $5 million in other assets offset by a $747,000 reduction in debt securities available for sale due to principal paydowns and unrealized gains during the year, and $933,000 in decreased value of our deferred tax asset. The Company experienced growth across the various loan types due to new organic originations. The net increase in loans resulted from $112 million in commercial real estate loans, $15 million in land and construction loans, $37 million in commercial, and $21 million in residential real estate loans. The growth experienced in the loan portfolio is due to the implementation of our relationship-based banking model and the success of our lenders in competing for new business in a highly competitive South Florida area.
Current wording
The Company’s total assets at December 31, 2024, were $933 million, an increase of $142 million from December 31, 2023. The increase primarily consisted of increases of $17 million in cash and cash equivalents, $124 million in net loans, offset by a $1.5 million reduction in debt securities available for sale due to principal paydowns and unrealized losses during the year, and $98,000 in increased value of our deferred tax asset. The Company experienced growth across the various loan types due to new organic originations. The net increase in loans resulted from $63 million increase in commercial real estate loans, $45 million increase in land and construction loans, $11 million increase in commercial, $6 million of Consumer loans and $3 million increase in residential real estate loans. The growth experienced in the loan portfolio is due to the implementation of our relationship-based banking model and the success of our lenders in competing for new business in a highly competitive South Florida area.
Previous wording
The Company’s total liabilities at December 31, 2023, were $721 million, an increase of $199 million from December 31, 2022. The increase in total liabilities was mainly due to an increase of $132 million in total deposits, $13.6 in Federal Reserve Bank advances, and increase of $52 million in Federal Home Loan Bank advances.
Current wording
The Company’s total liabilities at December 31, 2024, were $830 million, an increase of $109 million from December 31, 2023. The increase in total liabilities was mainly due to an increase of $133 million in total deposits, offset by a decrease of $12 million in Federal Home Loan Bank advances and a decrease of $13.6 million in FRB advances.
Previous wording
The Company’s total stockholders’ equity at December 31, 2023, was $70 million, an increase of $7.4 million from December 31, 2022. The increase was principally due to the, issuance of common stock for an aggregate amount of $324,000, increase in unrealized gain on debt securities of $511,000, and net income of $6.3 million.
Current wording
The Company’s total stockholders’ equity at December 31, 2024, was $103 million, an increase of $33 million from December 31, 2023. The increase was principally due to the issuance of common stock and preferred stock for an aggregate amount of $19.8 million, partially offset by an increase in unrealized losses on debt securities of $257,000, and net income of $13.1 million.
Previous wording
At December 31, 2023, the Bank had a Tier 1 leverage ratio of 10%.
Current wording
At December 31, 2024, the Bank had a Tier 1 leverage ratio of 10.91%.
Previous wording
Interest Income. Interest income increased by $15.9 million to $35.8 million for the year ended December 31, 2023 from $19.9 million for the year ended December 31, 2022, primarily due to an increase in loan volume.
Current wording
Interest Income. Interest income increased by $23.8 million to $59.6 million for the year ended December 31, 2024 from $35.8 million for the year ended December 31, 2023, primarily due to increases in loan volume and in interest rates.
Previous wording
***Interest Expense.***Interest expense on deposits and borrowings increased by $8.0 million to $12.1 million for the year ended December 31, 2023 compared to the prior year. The increase in interest expense was caused by increases in interest rates paid on deposits and borrowings offset by volume increases in deposits and borrowings.
Current wording
***Interest Expense.***Interest expense on deposits and borrowings increased by $12.9 million to $24.9 million for the year ended December 31, 2024 compared to $12.1 million from the prior year. The increase in interest expense was caused by increases in interest rates paid on deposits and borrowings and volume increases in deposits.
Previous wording
Expected credit loss expense was $4.0 million during the year ended December 31, 2023, and $3.5 million for the year ended December 31, 2022. The expected credit loss expense is charged to earnings as losses are expected 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, economic forecasts and other factors related to the estimated collectability of our loan portfolio. The allowance for credit losses totaled $7.6 million or 1.13% of loans outstanding at December 31, 2023, compared to $5.8 million or 1.20% of loans outstanding at December 31, 2022. The increase in the credit loss expense during the year ended on December 31, 2023 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the year ended December 31, 2023, the net charge off amounting to $2 million resulted from consumer lending.
Current wording
Expected credit loss expense was $2.2 million during the year ended December 31, 2024, and $4.0 million for the year ended December 31, 2023. The Company adopted the Current Expected Credit Loss (CECL) methodology on January 1, 2023. The CECL expense is charged to earnings as losses are expected 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, economic forecasts and other factors related to the estimated collectability of our loan portfolio. The allowance for credit losses totaled $8.6 million or 1.08% of loans outstanding at December 31, 2024, compared to $7.6 million or 1.13% of loans outstanding at December 31, 2023. The decrease in the credit loss expense during the year ended on December 31, 2024 was primarily due to improvements in the credit quality of the loan portfolio and the evaluation of the other factors noted above. During the year ended December 31, 2024, the net charge-off amounting to $1.4 million resulted from consumer lending.
Previous wording
Noninterest Income. Total noninterest income of $3.5 million increased by $492,000 for the year ended December 31, 2023, from $3 million for the year ended December 31, 2022. The increase is primarily related to service charges, wire transfers, and ACH fees on deposit payment transactions.
Current wording
Noninterest Income. Total noninterest income of $4.6 million increased by $1.2 million for the year ended December 31, 2024, from $3.5 million for the year ended December 31, 2023. The increase is primarily related to service charges on deposits, wire transfers, and ACH fees on deposit payment transactions.
Previous wording
Noninterest Expenses. Total noninterest expenses of $14.7 million increased by $4.7 million for the year ended December 31, 2023, compared to $9.9 million for the year ended December 31, 2022. The increase is primarily due to a one-time litigation settlement, increases in salaries and employee benefits, data processing, and other operating costs. The headcount of full-time equivalent employees increased from 48 to 60. The increase in noninterest expenses is directly attributable to the growth of the Bank.
Current wording
Noninterest Expenses. Total noninterest expenses of $19.5 million increased by $4.8 million for the year ended December 31, 2024, compared to $14.7 million for the year ended December 31, 2023. The increase is primarily due to increases in salaries and employee benefits, data processing, and other operating costs. The headcount of full-time equivalent employees increased from 60 to 73. The increase in noninterest expenses is directly attributable to the growth of the Bank.
Previous wording
***Income Taxes.***The Company recorded income taxes of $2.2 million for the year ended December 31, 2023 compared to an income tax expense of $1.4 million for the year ended December 31, 2022.
Current wording
***Income Taxes.***The Company recorded income taxes of $4.5 million for the year ended December 31, 2024 compared to an income tax expense of $2.2 million for the year ended December 31, 2023.