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“We also achieved noteworthy growth in noninterest income, which rose to $1.115 million—up 22.4% from $911,000 in the same period last year. This increase was primarily attributed to higher service charges and an increase in other noninterest income, underscoring the strength of our diversified revenue streams. Concurrently, our noninterest expenses increased by 45.0% to $5.285 million, largely due to investments in salaries, employee benefits, and data processing costs, which are critical to supporting our growth initiatives. In short order, many of the added expenses are expected to generate additional income, as much of these expenses went toward expanding our SBA department and enhanced software to provide additional treasury management tools to our customers.”

“On the asset side, our gross loans expanded to $778 million, reflecting strong demand for our lending products. Total deposits grew by 26.1% to $806.5 million, driven by a substantial 134.5% increase in time deposits.”

“As we look ahead, we remain optimistic about our ability to build on these achievements and sustain our growth momentum. We have also commenced our active ATM offering, which is regularly providing us with additional capital to support our balance sheet. We are grateful for the continued support of our stakeholders and remain dedicated to enhancing our market position through strategic lending, disciplined expense management, and operational innovation.”

Net Interest Income and Net Interest Margin

Three Months Ended
(Dollars in thousands)

Net interest income for the third quarter of 2024 was $8.962 million, reflecting a 51.5% increase from $5.914 million in the third quarter of 2023. This growth was primarily driven by a 44.9% increase in average interest-earning assets from the prior year, contributing significantly to the rise in net interest income. The net interest margin improved to 3.96% from 3.79%, up by 17 basis points, demonstrating effective asset utilization and growth despite increased interest-bearing deposit costs.

Noninterest Income

Three Months and Nine Months Ended September 30
(Dollars in thousands)

Noninterest income for the third quarter of 2024 was $1.115 million, a 22.4% increase from $911,000 in the same period in 2023. The increase was primarily driven by higher service charges and fees, which rose to $990,000 from $881,000 in the third quarter of 2023. Additionally, there was a significant increase in other noninterest income, which grew to $125,000 from $30,000 in the third quarter of 2023.

For the nine months ended September 30, 2024, noninterest income totaled $3.555 million, a substantial increase of 47.4% compared to $2.412 million for the same period in 2023. This growth was again primarily due to higher service charges and fees, which increased to $2.822 million from $2.359 million year-over-year, coupled with a notable rise in other noninterest income, which jumped to $733,000 from $53,000 in the previous year.

Noninterest Expense

Three Months and Nine Months Ended September 30
(Dollars in thousands)

Noninterest expenses for the nine months ended September 30, 2024, reached $15.1 million, up 37.4% from $11.0 million in the same period in 2023. This increase reflects strategic investments to support the bank’s expansion and prepare for continued growth.

A large portion of this increase was driven by higher salaries and employee benefits, which rose to $9.0 million from $6.1 million, reflecting the bank’s commitment to building a workforce capable of managing our expanding service offerings. Data processing expenses also grew from $1.2 million to $1.7 million, due to investments in advanced treasury management software. This new software enables us to better support our current clients’ needs and attract new clients, generating additional fee income as we expand our treasury management capabilities.

Further contributing to the rise in expenses were increases in regulatory assessments, up from $522,000 to $593,000, and professional fees, which rose to $699,000 from $529,000. These costs reflect both heightened compliance efforts in line with the bank’s growing operations and the specialized expertise needed to scale our services. Together, these investments in talent, technology, and compliance are part of our strategy to position the bank for sustainable growth, allowing us to serve a broader client base while moving closer to our goal of becoming a $1 billion institution.

Loans and Credit Quality
(Dollars in thousands)

Change in Allowance for Credit Losses
(Dollars in thousands)

Nine Months Ended September 30
(Dollars in thousands)

As of September 30, 2024, gross loans reached $778.1 million, a significant increase of 14.4% from $680.1 million at the end of December 2023. After accounting for net deferred loan fees and costs, which decreased by 37.6.% to $(807,000), and an increase of 8.5% in the allowance for credit losses, the total net loans amount to $768.9 million, reflecting a 14.6% rise from $671.1 million at the close of 2023.

The allowance for credit losses at the end of September 2024 stands at $8.3 million, up 8.5% from $7.7 million as of December 31, 2023. This increase can be attributed to a combination of credit loss expense adjustments and recoveries across different loan categories. The breakdown of the allowance for credit losses reveals the following key changes, for the three months ended September 30, 2024:

On September 30, 2024, the allowance for credit losses stands at 1.07% of total loans and covers 382% of nonperforming loans, reinforcing the bank’s commitment to prudent risk management.

Deposits
Deposits Summary
Condensed Consolidated Balance Sheets
(Dollars in thousands)

Deposits Summary
Nine Months Ended September 30
(Dollars in thousands)

Interest Rates on Deposits
(Dollars in thousands)

Deposit Composition
(Percentage of Total Deposits)

Total deposits were $806.5 million on September 30, 2024, up from $639.6 million on December 31, 2023, representing a 26.1% increase. Contributing to this growth was a 3.8% increase in noninterest-bearing demand deposits, which rose to $202.4 million from $194.9 million. Savings, NOW, and money-market deposits decreased slightly by 1.4% to $318.4 million from $322.9 million. The net increase in deposits for the first nine months of 2024 was $166.9 million, compared to the $43.7 million increase in the same period in 2023. Interest-bearing deposits, comprising savings, NOW, money-market deposits, and time deposits, totaled $806.5 million. Uninsured deposits made up 20.51% of total deposits on September 30, 2024, compared to 28.9% on December 31, 2023. Noninterest deposits accounted for 25.1% of total deposits, down from 30.5% at the end of 2023.

Capital Requirements to be Well Capitalized
(Dollars in thousands)

As of September 30, 2024, the Tier 1 capital to total assets ratio was 10.38%, representing a Tier 1 capital amount of $96,800. This is an increase from December 31, 2023, when the ratio was 10.00% with Tier 1 capital of $74,999.

Safe Harbor Statement

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

Investor Relations & Corporate Relations

Contact: Seth Denison
Telephone: (305) 401-4140
Email: SDenison@OptimumBank.com

Select Financial Data

Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)

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

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