OptimumBank Holdings, Inc.

Previous wording

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. At March 31, 2025 the SBA loan portfolio totaled $9.9 million, or 1.2% of total loans, up from $9 million, or 1.1% of loans at December 31, 2024. 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, out-of-area loans.

Current wording

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.

Previous wording

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 during 2025.

Current wording

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.

Previous wording

As of March 31, 2025, the Bank is well capitalized under regulatory guidelines.

Current wording

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

Previous wording

Refer to Note 9 for the Bank’s actual and required minimum capital ratios.

Current wording

Refer to Note 9 in the condensed consolidated financial statements, which presents the Bank’s actual and required minimum capital ratios.

Previous wording

The Company’s total assets increased by approximately $44.6 million to $977.5 million at March 31, 2025, from $932.9 million at December 31, 2024, primarily due to increases in cash and cash equivalents. Net loans decreased by $3.7 million to $791.2 million at March 31, 2025, from $794.9 million at December 31, 2024. Deposits grew by approximately $80.7 million to $852.9 million at March 31, 2025, from $772.2 million at December 31, 2024. Total stockholders’ equity increased by approximately $4.8 million to $108 million at March 31, 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.

Current wording

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.

Previous wording

The following table shows selected information for the periods ended or at the dates indicated:

Current wording

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

Previous wording

(1) Annualized for the three months ended March 31, 2025.

Current wording

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

Previous wording

The Company’s sources of funds include customer deposits, advances from the Federal Home Loan Bank of Atlanta (“FHLB”), principal repayments and sales of debt securities, loan repayments, the use of Federal Funds markets, net earnings, and loans taken out at the Federal Reserve Bank discount window.

Current wording

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.

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. Some of our securities are pledged to the Federal Reserve Bank. The market value of securities pledged to the Federal Reserve Bank was $1.7 million at March 31, 2025.

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 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.

Previous wording

The Company increased deposits by approximately $80.7 million during the three-month period ended March 31, 2025. The increase in deposits provided funding for new loan originations and the repayment of outstanding borrowings from FHLB.

Current wording

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.

Previous wording

In addition to obtaining funds from depositors, the Company may borrow funds from other financial institutions. At March 31, 2025, the Company had outstanding borrowings of $10 million, against its $233.2 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 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 March 31, 2025. At March 31, 2025, the Company also had available lines of credit amounting to $30.5 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

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.

Previous wording

Net earnings. Net earnings for the three months ended March 31, 2025, were $3.9 million or $0.33 per basic share and $0.32 per diluted share compared to net earnings of $2.4 million or $0.31 per basic share and $0.31 per diluted share for the three months ended March 31, 2024. The increase in net earnings during the three months ended March 31, 2025 compared to three months ended March 31, 2024 is primarily attributed to an increase in net interest income and increase in credit loss reversal.

Current wording

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.

Previous wording

Interest income. Interest income increased $1.5 million to $15 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due primarily to increases in average balances of interest earning assets.

Current wording

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.

Previous wording

***Interest expense.***Interest expense decreased $0.1 million to $5.6 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to reduction in deposit rates and repayment of borrowings, which lowered overall funding cost.

Current wording

***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.

Previous wording

Credit loss (reversal) expense. The Company recorded a credit loss reversal of $0.2 million for the three months ended March 31, 2025, compared to a credit loss expense of $1.1 million for the three months ended March 31, 2024. The expected credit loss (reversal) expense is a credit 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 1.03% of loans outstanding at March 31, 2025, compared to $8.7 million or 1.08% of loans outstanding at December 31, 2024. During the three-months ended March 31, 2025, the net charge off amounting to $246,000 resulted from consumer lending.

Current wording

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.

Previous wording

Noninterest income. Total noninterest income was $1.2 million for the three months ended March 31, 2025, compared to $1.2 for the three months ended March 31, 2024, The amount remained relatively unchanged, reflecting consistent performance in wire transfer and ACH fees during first quarter of 2025.

Current wording

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.

Previous wording

Noninterest expenses. Total noninterest expenses increased to $5.6 million for the three months ended March 31, 2025, compared to $4.7 million for the three months ended March 31, 2024, primarily due to employee compensation and benefits, professional fees, and other expenses.

Current wording

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.