OptimumBank 10Q 2024 Q3 Quarterly report

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 September 30, 2024

☐ 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: 000-50755

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		NASDAQ Capital Market

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: 10,090,038 shares of common stock, $.01 par value, issued and outstanding as of November 8, 2024.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

INDEX

	Page

PART I. FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Condensed Consolidated Balance Sheets — September 30, 2024 (unaudited) and December 31, 2023 (audited)	1

Condensed Consolidated Statements of Earnings — Three and Nine Months ended September 30, 2024 and 2023 (unaudited)	2

Condensed Consolidated Statements of Comprehensive Income — Three and Nine Months ended September 30, 2024 and 2023 (unaudited)	3

Condensed Consolidated Statements of Stockholders’ Equity — Three and Nine Months ended September 30, 2024 and 2023 (unaudited)	4

Condensed Consolidated Statements of Cash Flows —Nine Months ended September 30, 2024 and 2023 (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	27

Item 4. Controls and Procedures	27

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. Default Upon Senior Securities	27

Item 4. Mine Safety Disclosures	27

Item 5. Other Information	27

Item 6. Exhibits	27

SIGNATURES	28

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets

(Dollars in thousands, except per share amounts)

	September 30,			December 31,
	2024			2023
	(Unaudited)			(audited)
Assets:
Cash and due from banks	$	15,357		$	14,009
Interest-bearing deposits with banks		116,242			62,654
Total cash and cash equivalents		131,599			76,663
Debt securities available for sale		24,495			24,355
Debt securities held-to-maturity (fair value of $275 and $326)		300			360
Loans, net of allowance for credit losses of $8,337 and $7,683		768,914			671,094
Federal Home Loan Bank stock		2,454			3,354
Premises and equipment, net		1,938			1,375
Right-of-use lease assets		1,950			2,161
Accrued interest receivable		3,147			2,474
Deferred tax asset		2,788			2,903
Other assets		7,607			6,515

Total assets	$	945,192		$	791,254
Liabilities and Stockholders’ Equity:

Liabilities:
Noninterest-bearing demand deposits	$	202,373		$	194,892
Savings, NOW and money-market deposits		318,402			322,932
Time deposits		285,731			121,757

Total deposits		806,506			639,581

Federal Home Loan Bank advances		40,000			62,000
Federal Reserve Bank advances		—			13,600
Operating lease liabilities		2,056			2,248
Other liabilities		3,935			3,818

Total liabilities		852,497			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 shares authorized, 525,641 and 0 shares issued and outstanding		—			—
Preferred Stock, value		—			—
Common stock, $.01 par value; 30,000,000 shares authorized, 10,006,960 and 7,250,218 shares issued and outstanding		99			72
Additional paid-in capital		103,878			91,221
Accumulated deficit		(6,796	)		(15,971	)
Accumulated other comprehensive loss		(4,486	)		(5,315	)

Total stockholders’ equity		92,695			70,007
Total liabilities and stockholders’ equity	$	945,192		$	791,254

See accompanying notes to condensed consolidated financial statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands, except per share amounts)

	2024		2023		2024		2023
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Interest income:
Loans	$	13,588	$	7,996	$	38,372	$	21,837
Debt securities		163		167		498		517
Other		1,583		739		5,116		2,243

Total interest income		15,334		8,902		43,986		24,597

Interest expense:
Deposits		5,962		2,841		16,959		7,829
Borrowings		410		147		1,574		203

Total interest expense		6,372		2,988		18,533		8,032

Net interest income		8,962		5,914		25,453		16,565

Credit loss expense		357		1,446		1,610		2,970

Net interest income after credit loss expense		8,605		4,468		23,843		13,595

Noninterest income:
Service charges and fees		990		881		2,822		2,359
Other		125		30		733		53

Total noninterest income		1,115		911		3,555		2,412

Noninterest expenses:
Salaries and employee benefits		3,078		2,141		8,958		6,148
Professional fees		266		161		699		529
Occupancy and equipment		234		204		642		581
Data processing		574		455		1,702		1,206
Regulatory assessment		241		89		593		522
Litigation Settlement		—		—		—		375
Other		892		601		2,484		1,614

Total noninterest expenses		5,285		3,651		15,078		10,975

Net earnings before income taxes		4,435		1,728		12,320		5,032

Income taxes		1,133		459		3,147		1,298

Net earnings	$	3,302	$	1,269	$	9,173	$	3,734

Net earnings per share - Basic	$	0.34	$	0.18	$	1.02	$	0.52
Net earnings per share - Diluted		0.32		0.18		0.98		0.52

See accompanying notes to condensed consolidated financial statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(In thousands)

	2024			2023			2024			2023
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2024			2023			2024			2023

Net earnings	$	3,302		$	1,269		$	9,173		$	3,734

Other comprehensive income (loss):
Change in unrealized loss on debt securities:
Unrealized gain (loss) arising during the period		1,296			(1,271	)		1,094			(937	)

Amortization of unrealized loss on debt securities transferred to held-to-maturity		—			2			1			4

Other comprehensive income (loss) before income taxes		1,296			(1,269	)		1,095			(933	)

Deferred income tax (provision) benefit		(331	)		321			(266	)		236

Total other comprehensive income (loss)		965			(948	)		829			(697	)

Comprehensive income	$	4,267		$	321		$	10,002		$	3,037

See accompanying notes to condensed consolidated financial statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Stockholders’ Equity

Three and Nine Months Ended September 30, 2024 and 2023

(Dollars in thousands)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity
	Preferred Stock
	Series A				Series B				Series C				Common Stock				Additional Paid-In		Accumulated			Accumulated Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity
Balance at December 31, 2022 (audited)		—	$	—		1,360	$	—		—	$	—		7,058,897	$	71	$	90,408	$	(22,073	)	$	(5,826	)	$	62,580

Additional allowance recognized due to adoption of Topic 326		—		—		—		—		—		—		—		—		—		(181	)		—			(181	)

Proceeds from the sale of common stock (unaudited)		—		—		—		—		—		—		72,221		—		324		—			—			324

Stock-based Compensation (unaudited)		—		—		—		—		—		—		119,101		1		489		—			—			490

Net change in unrealized loss on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—		—		—			538			538

Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)		—		—		—		—		—		—		—		—		—		—			1			1

Net earnings (unaudited)		—		—		—		—		—		—		—		—		—		1,153			—			1,153

Balance at March 31, 2023 (unaudited)		—	$	—		1,360	$	—		—	$	—		7,250,219	$	72	$	91,221	$	(21,101	)	$	(5,287	)	$	64,905

Net change in unrealized loss on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—		—		—			(289	)		(289	)

Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)		—		—		—		—		—		—		—		—		—		—			1			1

Net earnings (unaudited)		—		—		—		—		—		—		—		—		—		1,312			—			1,312

Balance at June 30, 2023 (unaudited)		—	$	—		1,360	$	—		—	$	—		7,250,219	$	72	$	91,221	$	(19,789	)	$	(5,575	)	$	65,929

Net change in unrealized loss on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—		—		—			(950	)		(950	)

Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)		—		—		—		—		—		—		—		—		—		—			2			2

Net earnings (unaudited)		—		—		—		—		—		—		—		—		—		1,269			—			1,269

Balance at September 30, 2023 (unaudited)		—	$	—		1,360	$	—		—		—	$	7,250,219	$	72	$	91,221	$	(18,520	)	$	(6,523	)	$	66,250

	Preferred Stock
	Series A				Series B				Series C				Common Stock				Additional Paid-In		Accumulated			Accumulated Comprehensive			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Loss			Equity
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)		—		—		—		—		—		—		73,050		1		306		—			—			307

Net change in unrealized loss on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—		—		—			(382	)		(382	)

Net earnings (unaudited)		—		—		—		—		—		—		—		—		—		2,377			—			2,377

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 loss 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

Balance at June 30, 2024 (unaudited)		—	$	—		1,360	$	—		525,641	$	—		9,677,431	$	96	$	102,424	$	(10,098	)	$	(5,451	)	$	86,971
Balance		—	$	—		1,360	$	—		525,641	$	—		9,677,431	$	96	$	102,424	$	(10,098	)	$	(5,451	)	$	86,971

Proceeds from sale of common stock (net of offering costs of $79) (unaudited)		—		—		—		—		—		—		329,529		3		1,454		—			—			1,457
Proceeds from sale of common stock (unaudited)		—		—		—		—		—		—		329,529		3		1,454		—			—			1,457

Net change in unrealized loss on debt securities available for sale (unaudited)		—		—		—		—		—		—		—		—		—		—			965			965

Net earnings (unaudited)		—		—		—		—		—		—		—		—		—		3,302			—			3,302

Balance at September 30, 2024 (unaudited)		—	$	—		1,360	$	—		525,641	$	—		10,006,960	$	99	$	103,878	$	(6,796	)	$	(4,486	)	$	92,695
Balance		—	$	—		1,360	$	—		525,641	$	—		10,006,960	$	99	$	103,878	$	(6,796	)	$	(4,486	)	$	92,695

See accompanying notes to condensed consolidated financial statements.

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

	2024			2023
	Nine Months Ended
	September 30,
	2024			2023
Cash flows from operating activities:
Net earnings	$	9,173		$	3,734
Adjustments to reconcile net earnings to net cash provided by operating activities:
Credit loss expense		1,610			2,970
Depreciation and amortization		207			172
Deferred income taxes		(151	)		857
Net accretion of fees, premiums and discounts		(247	)		6
Stock-based compensation expense		492			490
Increase in accrued interest receivable		(673	)		(338	)
Amortization of right of use asset		211			203
Net decrease in operating lease liabilities		(192	)		(177	)
Increase in other assets		(1,092	)		(1,148	)
Increase (Decrease) in other liabilities		310			(226	)
Net cash provided by operating activities	$	9,648			6,543

Cash flows from investing activities:
Principal repayments of debt securities available for sale		859			976
Principal repayments of debt securities held-to-maturity		61			151
Net increase in loans		(99,279	)		(99,134	)
Purchases of premises and equipment		(770	)		(489	)
Redemption (Purchase) of FHLB stock		900			(284	)
Net cash used in investing activities		(98,229	)		(98,780	)

Cash flows from financing activities:
Net increase in deposits		166,925			110,475
Net (decrease) in FHLB Advances		(22,000	)		—
Net (decrease) increase in FRB Advances		(13,600	)		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 $418)		10,260			324

Net cash provided by financing activities		143,517			124,399

Net increase in cash and cash equivalents		54,936			32,162

Cash and cash equivalents at beginning of the period		76,663			71,836

Cash and cash equivalents at end of the period	$	131,599		$	103,998

Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest	$	18,537		$	7,888

Income taxes	$	3,147		$	457

Noncash transactions:
Change in accumulated other comprehensive loss, net change in unrealized loss on debt securities available for sale, net of income taxes	$	828		$	(697	)

Amortization of unrealized loss on debt securities transferred to held-to-maturity	$	1		$	4
Reduction stockholders’ equity due to adoption of Topic 326, net		—			(181	)
Right-of use lease assets obtained in exchange for operating lease liabilities	$	—		$	315

See accompanying notes to condensed consolidated financial statements.

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 and Dade Counties, 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 September 30, 2024, the results of operations for the three and nine month periods ended September 30, 2024 and 2023, and the cash flow for the nine months ended September 30, 2024 and 2023 All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the full year.

Comprehensive Income. Generally Accepted Accounting Principles generally require that 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 (in thousands):

Schedule of Accumulated Other Comprehensive Loss

	September 30,			December 31,
	2024			2023

Unrealized loss on debt securities available for sale	$	(6,012	)	$	(7,106	)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity		(12	)		(13	)
Income tax benefit		1,538			1,804

Accumulated other comprehensive loss	$	(4,486	)	$	(5,315	)

(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 (in thousands):

Schedule of Amortized Cost and Approximate Fair Values of Debt Securities

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

At September 30, 2024:
Available for sale:
SBA Pool Securities	$	611	$	—	$	(13	)	$	598
Collateralized mortgage obligations		129		—		(12	)		117
Taxable municipal securities		16,663		—		(3,878	)		12,785
Mortgage-backed securities		13,104		—		(2,109	)		10,995
Total	$	30,507	$	—	$	(6,012	)	$	24,495

Held-to-maturity:
Collateralized mortgage obligations	$	300	$	—		(25	)	$	275
Total	$	300	$	—		(25	)	$	275

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2) Debt Securities, Continued.

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value

*At December 31, 2023:*
Available for sale:
SBA Pool Securities	$	706	$	—	$	(16	)	$	690
Collateralized mortgage obligations		138		—		(15	)		123
Taxable municipal securities		16,690		—		(4,480	)		12,210
Mortgage-backed securities		13,927		—		(2,595	)		11,332
Total	$	31,461	$	—	$	(7,106	)	$	24,355

Held-to-maturity:
Collateralized mortgage obligations	$	353	$	—		(35	)	$	318
Mortgage-backed securities		7		1		—			8
Total	$	360	$	1		(35	)	$	326

There were no sales of debt securities during the three and nine months ended September 30, 2024 and 2023.

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 (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 September 30, 2024:*
Available for Sale:
SBA Pool Securities		(13	)		598		—			—
Collateralized mortgage obligation		(12	)		117		—			—
Taxable municipal securities		(3,878	)		12,785		—			—
Mortgage-backed securities		(2,109	)		10,995		—			—
Total	$	(6,012	)	$	24,495	$	—		$	—

*At December 31, 2023:*
Available for Sale :
SBA Pool Securities		(16	)		690		—			—
Collateralized mortgage obligation		—			—		(15	)		123
Taxable municipal securities		(4,480	)		12,210		—			—
Mortgage-backed securities		(2,595	)		11,332		—			—
Total	$	(7,091	)	$	24,232	$	(15	)	$	123

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(2) Debt Securities, Continued.

At September 30, 2024 and December 31, 2023, the unrealized losses on forty investment debt securities in each period were attributable to changes in interest rates.

Management evaluates debt securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments.

The Company performed an analysis that determined that the mortgage-backed securities, collateralized mortgage obligations, and U.S. government securities, and SBA pool 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 September 30, 2024 and December 31, 2023 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of September 30, 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 (in thousands):

Schedule of Components of Loans

	September 30,			December 31,
	2024			2023

Residential real estate	$	75,877		$	71,400
Multi-family real estate		62,280			67,498
Commercial real estate		479,038			422,680
Land and construction		72,729			32,600
Commercial		39,957			41,870
Consumer		48,177			44,023

Total loans		778,058			680,071

Deduct:
Net deferred loan fees, and costs		(807	)		(1,294	)
Allowance for credit losses		(8,337	)		(7,683	)

Loans, net	$	768,914		$	671,094

(continued)

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 (in thousands):

Schedule of Changes in Allowance for Loan Losses

	Residential			Multi-Family		Commercial			Land and
	Real Estate			Real Estate		Real Estate			Construction		Commercial			Consumer			Total
Three Months Ended September 30, 2024:
Beginning balance	$	970			712		4,303			1,677		134			412			8,208
Additional allowance recognized due to adoption of Topic 326
Balance January 1, 2023
Credit loss (expense) income		265			114		(803	)		605		47			181			409
Charge-offs		—			—		—			—		—			(366	)		(366	)
Recoveries		—			—		—			—		—			86			86
Ending balance (September 30, 2024)	$	1,235		$	826	$	3,500		$	2,282	$	181		$	313		$	8,337

Three Months Ended September 30, 2023:
Beginning balance	$	883			1,037		2,802			680		135			1,108			6,645
Credit loss (expense) income		(113	)		184		620			194		102			337			1,324
Charge-offs		—			—		—			—		(10	)		(872	)		(882	)
Recoveries		—			—		—			—		—			113			113
Ending balance (September 30, 2023)	$	770		$	1,221	$	3,422		$	874	$	227		$	686		$	7,200

During the three months period ended September 30, 2024, the Company recognized $52,000 of credit loss income related to unfunded loan commitments.

During the three months ended September 30, 2023, the Company recognized credit loss expense of $122,000 related to unfunded loan commitments.

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3) Loans, Continued.

	Residential			Multi-Family			Commercial			Land and
	Real Estate			Real Estate			Real Estate			Construction		Commercial			Consumer			Total
Nine Months Ended September 30, 2024:
Balance Dec 31, 2023	$	1,020			1,041			3,793			1,019		281			529			7,683
Credit loss (expense) income		215			(215	)		(293	)		1,263		(83	)		916			1,803
Charge-offs		—			—			—			—		(17	)		(1,424	)		(1,441	)
Recoveries		—			—			—			—		—			292			292
Ending balance (September 30, 2024)	$	1,235		$	826		$	3,500		$	2,282	$	181		$	313		$	8,337

Nine Months Ended September 30, 2023:
Beginning balance Dec 31, 2022	$	768			748			3,262			173		277			565			5,793
Beginning balance	$	768			748			3,262			173		277			565			5,793
Additional allowance recognized due to adoption of Topic 326		33			327			(367	)		278		(262	)		209			218
Balance January 1, 2023	$	801		$	1,075		$	2,895		$	451	$	15		$	774		$	6,011
Credit loss (expense) income	$	(31	)		146			527			423		177			1,393			2,635
Charge-offs		—			—			—			—		(52	)		(1,676	)		(1,728	)
Recoveries		—			—			—			—		87			195			282
Ending balance (September 30, 2023)	$	770		$	1,221		$	3,422		$	874	$	227		$	686		$	7,200
Ending balance	$	770		$	1,221		$	3,422		$	874	$	227		$	686		$	7,200

During the nine months ended September 30, 2024, the Company recognized $193,000 of credit loss income related to unfunded loan commitments.

During the nine months ended September 30, 2023, the Company recognized credit loss expense of $335,000 related to unfunded loan commitments.

(3) Loans, Continued. 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)

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 analyzes 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)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3) Loans, Continued. Age analysis of past-due loans is as follows (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 Past		Total Past Due		Current		Nonaccrual Loans		Total Loans

At September 30, 2024:
Residential real estate	$	—	$	—	$	—	$	—	$	75,877	$	—	$	75,877
Multi-family real estate		—		—		—		—		62,280		—		62,280
Commercial real estate		—		—		—		—		477,620		1,418		479,038
Land and construction		—		—		—		—		72,729		—		72,729
Commercial		—		—		—		—		39,798		159		39,957
Consumer		201		66		—		267		47,305		605		48,177

Total	$	201	$	66	$	—	$	267	$	775,609	$	2,182		778,058

At December 31, 2023:
Residential real estate	$	—	$	—	$	—	$	—	$	71,400	$	—	$	71,400
Multi-family real estate		—		—		—		—		67,498		—		67,498
Commercial real estate		—		—		—		—		422,680		—		422,680
Land and construction		—		—		—		—		32,600		—		32,600
Commercial		—		—		—		—		41,870		—		41,870
Consumer		230		208		—		438		42,560		1,025		44,023

Total	$	230	$	208	$	—	$	438	$	678,608	$	1,025	$	680,071

The Company has not made any modifications of loans to borrowers experiencing financial difficulties during the three and nine months ended September 30, 2024 and 2023.

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3) Loans, Continued.

Term Loans

Amortized Cost Basis by Origination Year

Schedule of Amortized Cost Basis

Land and Construction	September 30, 2024		2023			2022			2021			2020		Prior			Revolving Loans (Amortized Cost Basis)		Revolving Loans Converted to Term Loans (Amortized Cost Basis)		Total
Pass	$	1,940		49,593			14,540			2,454			1,456		2,746			—		—		72,729
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		—			—			—			—		—			—		—		—
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	1,940	$	49,593		$	14,540		$	2,454		$	1,456	$	2,746		$	—	$	—	$	72,729
Current period Gross write—offs	$	—		—			—			—			—		—			—		—		—
Residential real estate
Pass	$	7,500		21,323			23,364			9,035			4,418		7,705			—		—		73,345
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		—			1,892			—			—		640			—		—		2,532
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	7,500	$	21,323		$	25,256		$	9,035		$	4,418	$	8,345		$	—	$	—	$	75,877
Current period Gross write—offs	$	—		—			—			—			—		—			—		—		—
Multi—family real estate
Pass	$	—		588			27,938			24,643			5,934		3,177			—		—		62,280
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		—			—			—			—		—			—		—		—
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	—	$	588		$	27,938		$	24,643		$	5,934	$	3,177		$	—	$	—	$	62,280
Current period Gross write—offs	$	—		—			—			—			—		—			—		—		—
Commercial real estate (CRE)
Pass	$	78,965		124,673			189,639			49,515			14,512		19,134			—		—		476,438
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		—			—			—			—		2,600			—		—		2,600
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	78,965	$	124,673		$	189,639		$	49,515		$	14,512	$	21,734		$	—	$	—	$	479,038
Current period Gross write—offs	$	—		—			—			—			—		—			—		—		—
Commercial
Pass	$	13,244		22,892			1,958			1,086			597		21			—		—		39,798
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		159			—			—			—		—			—		—		159
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	13,244	$	23,051		$	1,958		$	1,086		$	597	$	21		$	—	$	—	$	39,957
Current period Gross write—offs	$	—		—			—			—			—		(17	)		—		—		(17	)
Consumer
Pass	$	548		5,579			3,583			1,693			57		8			36,104		—		47,572
OLEM (Other Loans Especially Mentioned)		—		—			—			—			—		—			—		—		—
Substandard		—		—			—			—			—		—			605		—		605
Doubtful		—		—			—			—			—		—			—		—		—
Loss		—		—			—			—			—		—			—		—		—
Subtotal loans	$	548	$	5,579		$	3,583		$	1,693		$	57	$	8		$	36,709	$	—	$	48,177
Current period Gross write—offs	$	—		(566	)		(650	)		(204	)		—		(4	)		—		—		(1,424	)

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3) Loans, Continued.

	Term Loans																			Revolving Loans Converted
	Amortized Cost Basis by Origination Year																	Revolving		to Term
Land and construction	2023			2022			2021			2020			2019		Prior			Loans (Amortized Cost Basis)		Loans (Amortized Cost Basis)		Total
Pass	$	11,869		$	14,933		$	2,689		$	1,488		$	1,621	$	—		$	—	$	—	$	32,600
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—		—			—		—		—
Substandard		—			—			—			—			—		—			—		—		—
Doubtful		—			—			—			—			—		—			—		—		—
Loss		—			—			—			—			—		—			—		—		—
Subtotal loans	$	11,869		$	14,933		$	2,689		$	1,488		$	1,621	$	—		$	—	$	—	$	32,600
Current period Gross write-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—	$	—
Residential real estate
Pass	$	21,343		$	25,898		$	9,747		$	4,777		$	4,044	$	4,844		$	747	$	—	$	71,400
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—		—			—		—		—
Substandard		—			—			—			—			—		—			—		—		—
Doubtful		—			—			—			—			—		—			—		—		—
Loss		—			—			—			—			—		—			—		—		—
Subtotal loans	$	21,343		$	25,898		$	9,747		$	4,777		$	4,044	$	4,844		$	747	$	—	$	71,400
Current period Gross write-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—	$	—
Multi-family real estate
Pass	$	1,369		$	29,561		$	27,224		$	6,086		$	2,064	$	1,194		$	—	$	—	$	67,498
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—		—			—		—		—
Substandard		—			—			—			—			—		—			—		—		—
Doubtful		—			—			—			—			—		—			—		—		—
Loss		—			—			—			—			—		—			—		—		—
Subtotal loans	$	1,369		$	29,561		$	27,224		$	6,086		$	2,064	$	1,194		$	—	$	—	$	67,498
Current period Gross write-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—	$	—
Commercial real estate
Pass	$	123,081		$	204,425		$	52,536		$	15,297		$	12,593	$	13,539		$	—	$	—	$	421,471
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—		—			—		—		—
Substandard		—			—			—			—			1,209		—			—		—		1,209
Doubtful		—			—			—			—			—		—			—		—		—
Loss		—			—			—			—			—		—			—		—		—
Subtotal loans	$	123,081		$	204,425		$	52,536		$	15,297		$	13,802	$	13,539		$	—	$	—	$	422,680
Current period Gross write-offs	$	—		$	—		$	—		$	—		$	—	$	—		$	—	$	—	$	—
Commercial business loans
Pass	$	37,854		$	1,935		$	1,403		$	634		$	44	$	—		$	—	$	—	$	41,870
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—							—		—
Substandard		—			—			—			—			—							—		—
Doubtful		—			—			—			—			—							—		—
Loss		—			—			—			—			—							—		—
Subtotal loans	$	37,854		$	1,935		$	1,403		$	634		$	44	$	—		$	—	$	—	$	41,870
Current period Gross write-offs	$	(45	)	$	—		$	—		$	—		$	—	$	(26	)	$	—	$	—	$	(71	)
Consumer
Pass	$	8,657		$	7,033		$	3,627		$	147		$	111	$	—		$	23,423	$	—	$	42,998
OLEM (Other Loans Especially Mentioned)		—			—			—			—			—		—			—		—		—
Substandard		—			—			—			—			—		—			1,025		—		1,025
Doubtful		—			—			—			—			—		—			—		—		—
Loss		—			—			—			—			—		—			—		—		—
Subtotal loans	$	8,657		$	7,033		$	3,627		$	147		$	111	$	—		$	24,448	$	—	$	44,023
Current period Gross write-offs	$	(423	)	$	(1,065	)	$	(880	)	$	(3	)	$	—	$	—		$	—	$	—	$	(2,371	)

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(3) Loans, Continued.

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 estimated loss on loans 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.

(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. During the three and nine months periods ended September 30, 2024 and 2023, Series C convertible Preferred, each share of Series C Convertible Preferred can be converted into one share of common stock 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												Nine Months Ended
	September 30,												September 30,
	2024						2023						2024						2023
(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	$	3,302		9,763,319	$	0.34	$	1,269		7,250,218		0.18	$	9,173		9,009,138		1.02	$	3,734		7,234,793	$	0.52
Effect of conversion of series C preferred shares				525,641						—						356,822						—
Diluted EPS:
Net earnings	$	3,302		10,288,960	$	0.32	$	1,269		7,250,218		0.18	$	9,173		9,365,960		0.98	$	3,734		7,234,793	$	0.52

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(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 1,050,000 shares of common stock under the 2018 Plan, due to an amendment to increase the number of authorized shares from 500,000 to 1,050,000 that was approved by shareholders in June 2023. At September 30, 2024, there were 423,659 shares remain available for grant.

During the nine-month period ended September 30, 2024, the Company issued 73,050 shares to employees for services performed and recorded compensation expense of $307,000.

During the nine-month period ended September 30, 2024, the Company issued 42,610 shares to a director for services performed and recorded compensation expense of $185,000.

During the nine-month period ended September 30, 2023, the Company issued 52,622 shares to employees for services performed and recorded compensation expense of $216,000.

During the nine-month period ended September 30, 2023, the Company issued 66,479 shares to a director for services performed and recorded compensation expense of $274,000.

(6) Fair Value Measurements.

Debt securities available for sale measured at fair value on a recurring basis are summarized below (in thousands):

Schedule of Debt Securities Available for Sale Measured at Fair Value on Recurring Basis

			Fair Value Measurements Using
			Quoted Prices In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Fair Value		(Level 1)		(Level 2)		(Level 3)
At September 30, 2024:
SBA Pool Securities	$	598	$	—	$	598		—
Collateralized mortgage obligations		117		—		117		—
Taxable municipal securities		12,785		—		12,785		—
Mortgage-backed securities		10,995		—		10,995		—
Total	$	24,495		—	$	24,495		—

At December 31, 2023:
SBA Pool Securities	$	690	$	—	$	690		—
Collateralized mortgage obligations		123		—		123		—
Taxable municipal securities		12,210		—		12,210		—
Mortgage-backed securities		11,332		—		11,332		—
Total	$	24,355		—	$	24,355		—

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(7) Fair Value of Financial Instruments. The estimated fair values and fair value measurement method with respect to the Company’s financial instruments were as follows (in thousands):

Schedule of Estimated Fair Value of Financial Instruments

	At September 30, 2024						At December 31, 2023
	Carrying Amount		Fair Value		Level		Carrying Amount		Fair Value		Level

Financial assets:
Cash and cash equivalents	$	131,599	$	131,599		1	$	76,663	$	76,663		1
Debt securities available for sale		24,495		24,495		2		24,355		24,355		2
Debt securities held-to-maturity		300		275		2		360		326		2
Loans		768,914		753,026		3		671,094		652,965		3
Federal Home Loan Bank stock		2,454		2,454		3		3,354		3,354		3
Accrued interest receivable		3,147		3,147		3		2,474		2,474		3

Financial liabilities:
Deposit liabilities		806,506		806,919		3		639,581		645,426		3
Federal Home Loan Bank advances		40,000		39,755		3		62,000		61,565		3
Federal Reserve Bank advances		—		—		3		13,600		13,592		3

(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 sheet. 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 on-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 September 30, 2024 follows (in thousands):

Schedule of Off-Balance Sheet Risks of Financial Instruments


Commitments to extend credit	$	32,675

Unused lines of credit	$	40,270

Standby letters of credit	$	3,403

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(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 September 30, 2024 and December 31, 2023, the Bank meets all capital adequacy requirements to which it is subject. The Bank’s actual capital amounts and percentages are presented in the table ($ 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 September 30, 2024:
Tier 1 Capital to Total Assets		96,800		10.38	%		83,905		9.00	%

As of December 31, 2023:
Tier 1 Capital to Total Assets		74,999		10.00	%		67,499		9.00	%

(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 September 30, 2024 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 250 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.

(continued)

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Condensed Consolidated Financial Statements (Unaudited)

(10) Series B and C Preferred Stock and ATM offering program, Continued.

On March 8, 2024, the Company’s board of directors approved the issuance of up to 4,000,000 of Series C Preferred Stock. As of September 30, 2024, 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.

During the nine-month period ended September 30, 2024, the company issued 525,641 of Series C Preferred Stock to an unrelated party at cash price of $3.90 per share, or an aggregate of $2,050,000.

At-the Market (ATM) Offering Program, in August 9, 2024, the Company filed a Form S-3 registration statement with Security and Exchange Commission, allowing for the sale of up to an aggregate of $25 million in shares of common stock through an ATM offering program. Under this program, the company sold 329,529 shares during the quarter ended on September 30, 2024, generating net proceeds of $1,457,000. The ATM Program will allow the Company to issue and sell to the public from time to time, 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.

(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.

The maturities and interest rates on the Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) advances were as follows (dollars in thousands)

Schedule of Maturities and Interest Rates on Federal Home Loan Bank and Federal Reserve Bank Advances

	Maturity	Interest			September 30,		December 31,
At September 30, 2024:	Year Ending	Rate			2024		2023
FRB	2024		4.89	%	$	—	$	13,600
FHLB	2024		4.96	%		30,000		30,000
FHLB	2024		5.57	%		—		22,000
FHLB	2025		1.01	%		10,000		10,000
					$	40,000	$	75,600

At September 30, 2024, FHLB Advances are structured as advances with potential calls on a quarterly basis.

FHLB advances are collateralized by a blanket lien requiring the Company to maintain certain first mortgage loans as pledged collateral. At September 30, 2024, the Company had remaining credit availability of $185 million. At September 30, 2024, the Company had loans pledged with a carrying value of $226 million as collateral for FHLB advances.

(continued)

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, 2023, 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 and savings deposits, treasury management fee income, and lower costs. Continued emphasis on expansion of our footprint and exploring additional lines of business are also part of our plans.

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.

Going forward, our strategic plan will be to continue to emphasize and build upon initiatives focused on strengthening internal controls, credit oversight and credit administrative processes and procedures. Moreover, management continues to identify loan growth opportunities, subject to the above caveat, that are designed to improve overall profitability without sacrificing credit quality and underwriting standards. This 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.

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.

Additionally, management has implemented initiatives that have enabled us to grow our loan portfolio primarily with locally generated relationships in the non-owner occupied, multi-family and commercial real estate sectors. However, out-of-area loans and loan pool purchases will be considered as deemed appropriate and subject to proper due diligence to further increase interest income and for portfolio diversification purposes.

(continued)

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

Properties

The Company opened its third branch office in North Miami Beach on July 8, 2024.

Capital Levels

As of September 30, 2024, the Bank is well capitalized under regulatory guidelines.

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

Financial Condition at September 30, 2024 and December 31, 2023

Overview

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.

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

	Nine Months Ended			Year Ended
	September 30, 2024			December 31, 2023

Average equity as a percentage of average assets		9.0	%		10.1	%

Equity to total assets at end of period		9.8	%		8.8	%

Return on average assets (1)		1.3	%		1.0	%

Return on average equity (1)		14.9	%		9.6	%

Noninterest expenses to average assets (1)		2.2	%		2.3	%

(1) Annualized for the nine months ended September 30, 2024.

Liquidity and Sources of Funds

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.

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.

(continued)

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

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 September 30,
	2024							2023
			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	$	770,206	$	13,588		7.06	%	$	544,540	$	7,996		5.87	%
Securities		24,045		163		2.71	%		24,732		167		2.70	%
Other (1)		110,521		1,583		5.73	%		55,140		739		5.36	%

Total interest-earning assets/interest income		904,772		15,334		6.78	%		624,412		8,902		5.70	%

Cash and due from banks		13,500							11,523
Premises and equipment		1,957							1,180
Other		7,025							1,701

Total assets	$	927,254						$	638,816

Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	326,365		2,707		3.32	%	$	179,776		1,102		2.45	%
Time deposits		244,374		3,255		5.33	%		168,428		1,739		4.13	%
Borrowings (2)		40,120		410		4.09	%		18,878		147		3.11	%

Total interest-bearing liabilities/interest expense		610,859		6,372		4.17	%		367,082		2,988		2.06	%

Noninterest-bearing demand deposits		220,564							200,516
Other liabilities		6,217							5,043
Stockholders’ equity		89,614							66,175

Total liabilities and stockholders’ equity	$	927,254						$	638,816

Net interest income			$	8,962						$	5,914

Interest rate spread (3)						2.61	%						3.64	%

Net interest margin (4)						3.96	%						3.79	%

Ratio of average interest-earning assets to average interest-bearing liabilities		1.48							1.70

(1)	Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
(2)	Includes Federal Home Loan Bank advances and Federal Reserve 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)

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

	Nine Months Ended September 30,
	2024							2023
			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	$	743,537	$	38,372		6.88	%	$	517,513	$	21,837		5.63	%
Securities		23,900		498		2.78	%		25,421		517		3.81	%
Other (1)		121,174		5,116		5.63	%		58,247		2,243		2.06	%

Total interest-earning assets/interest income		888,611		43,986		6.60	%		601,181		24,597		2.90	%

Cash and due from banks		13,844							14,141
Premises and equipment		1,720							1,108
Other		6,523							4,367

Total assets	$	910,698						$	620,797

Interest-bearing liabilities:
Savings, NOW and money-market deposits	$	323,694		7,613		3.14	%	$	143,815		1,768		1.64	%
Time deposits		234,652		9,346		5.31	%		212,114		6,061		3.81	%
Borrowings (2)		49,712		1,574		4.22	%		13,124		203		2.06	%

Total interest-bearing liabilities/interest expense		608,058		18,533		4.06	%		369,053		8,032		2.90	%

Noninterest-bearing demand deposits		214,773							181,890
Other liabilities		5,894							4,850
Stockholders’ equity		81,973							65,004

Total liabilities and stockholders’ equity	$	910,698						$	620,797

Net interest income			$	25,453						$	16,565

Interest rate spread (3)						2.54	%						2.56	%

Net interest margin (4)						3.82	%						3.67	%

Ratio of average interest-earning assets to average interest-bearing liabilities		1.46							1.63

(1)	Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
(2)	Includes Federal Home Loan Bank advances and Federal Reserve 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)

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

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

	Three Months Ended				Increase /
	September 30,				(Decrease)
(dollars in thousands, except per share amounts)	2024		2023		Amount			Percentage
Total interest income	$	15,334	$	8,902	$	6,432			72	%
Total interest expense		6,372		2,988		3,384			113	%
Net interest income		8,962		5,914		3,048			52	%
Credit loss expense		357		1,446		(1,089	)		-75	%
Net interest income after provision for loan losses		8,605		4,468		4,137			93	%
Total noninterest income		1,115		911		204			22	%
Total noninterest expenses		5,285		3,651		1,634			45	%
Net earnings before income taxes		4,435		1,728		2,707			157	%
Income taxes		1,133		459		674			147	%
Net earnings	$	3,302	$	1,269		2,033			160	%
Net earnings per share - Basic and diluted	$	0.34	$	0.18
Net earnings per share - Diluted		0.32		0.18

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.

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.

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.

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.

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.

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.

(continued)

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

Comparison of the Nine-Month Periods Ended September 30, 2024, and 2023

	Nine Months Ended				Increase /
	September 30,				(Decrease)
(dollars in thousands, except per share amounts)	2024		2023		Amount			Percentage
Total interest income	$	43,986	$	24,597	$	19,389			79	%
Total interest expense		18,533		8,032		10,501			131	%
Net interest income		25,453		16,565		8,888			54	%
Credit loss expense		1,610		2,970		(1,360	)		-46	%
Net interest income after provision for loan losses		23,843		13,595		10,248			75	%
Total noninterest income		3,555		2,412		1,143			47	%
Total noninterest expenses		15,078		10,975		4,103			37	%
Net earnings before income taxes		12,320		5,032		7,288			145	%
Income taxes		3,147		1,298		1,849			142	%
Net earnings	$	9,173	$	3,734		5,439			146	%
Net earnings per share - Basic	$	1.02	$	0.52
Net earnings per share - Diluted		0.98		0.52

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.

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.

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.

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.

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.

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.

(continued)

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 Principal 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 September 30, 2024, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

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

During the third quarter of 2024, the Company sold no unregistered shares of its equity securities.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

The disclosure contained under Part II, Item 2 is incorporated herein by reference.

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.

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: November 8, 2024	By:	/s/ Timothy Terry
		Timothy Terry
		Principal Executive Officer

	By:	/s/ Joel Klein
		Joel Klein
		Principal Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

3.1		Articles of Incorporation (incorporated by reference from Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on May 11, 2004)

3.2		Article of Amendment to Articles of Incorporation, dated March 8, 2024 (incorporated by reference from Current Report on Form 8-K filed with the SEC on March 28, 2024)

3.3		Articles of Amendment to the Articles of Incorporation dated January 7, 2009 (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 8, 2024)

3.4		Articles of Amendment to the Articles of Incorporation dated April 13, 2016 (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 8, 2024)

3.5		Articles of Amendment to the Articles of Incorporation dated December 28, 2022 (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 8, 2024)

3.6		Articles of Amendment to the Articles of Incorporation dated October 30, 2023 (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 8, 2024)

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 March 8, 2024)

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 Principal 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 Principal 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)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

OptimumBank (OPHC) 10-Q2024 Q3 Quarterly report

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