Comments from the President of OptimumBank Holdings, Inc. (OPHC-NASDAQ)
Fort Lauderdale, FL., May 26, 2021 (GLOBE NEWSWIRE) – OptimumBank Holdings, Inc. (OPHC-NASDAQ) I’ll start my comments this year like last year. I am grateful that we are all healthy and able to be here today. Most of us have seen major changes in our daily lives. Most of us have lost friends and family to the Corona virus. We have also seen the way business in many industries evolve. We have also seen how the real estate market has been affected. At the Bank, however, we have seen little change in how we operate. What has changed is the acceleration to achieve our goals. Last year, I said that I appreciate the confidence you have in me to lead our board and help OptimumBank Holdings, Inc. (the “Company”) achieve profitability and work towards our unique goal of generate returns for shareholders while protecting equity. Well 2020 was the year we finally hit baseline profitability that we so far exceeded at the end of the first quarter. Since we are currently five (5) months into 2021, I wanted to discuss our first quarter numbers and compare some of the numbers to the results from the end of last year and the first quarter of last year.
The Bank was and continues to work with the Small Business Administration (“SBA”) and its borrowers to implement the Paycheck Protection Plan (“PPP”). The Bank concluded 267 PPP loans totaling $ 17.7 million during the first quarter of this year, bringing the total amount to 471 PPP loans totaling $ 36.8 million. Of this total, $ 3.9 million has already been forgiven. We expect that ultimately the Bank will receive $ 1.3 million in commissions from PPP loans. OptimumBank facilitated these loans to help the local community, gain new customers, strengthen ties, and actively engage in cross-selling other Bank products.
At the Bank, we have been fortunate to avoid any major issues associated with COVID-19. Last year, at the onset of the pandemic, the Bank’s management acknowledged that to avoid any disruption in operations, its employees would need to achieve some degree of social distancing. Thus, the Bank made four (4) of its employees able to work from home to work remotely, which allowed an additional social distancing space for the employees who remained in the offices. The halls of the three (3) branches remained open throughout, however, customers were encouraged to use drive-thru when possible. The bank had bottles of hand sanitizer in all of its locations, signs promoting social distancing, and plexiglass barriers for customer service employees at branches. Management took the position from the start that if an employee felt he had been exposed to the coronavirus, he was required to notify management and was immediately discharged home for the remainder of a period of auto -14 days quarantine. from the date they were exposed, with full pay, no questions asked. The Bank has experienced three situations in which this procedure was implemented, leading to the closure of a branch for two distinct periods of one to two weeks, without any negative effect on the activity.
Since the start of the pandemic, the Bank has granted six-month abstentions on 58 loans totaling $ 43.7 million, which represented 31.5% of its gross loan portfolio. As expected, all of those forbearances expired and all borrowers have recovered and resumed their monthly mortgage payments.
In the first quarter of 2021, we had net income before allowance for loan losses of $ 324 thousand. This compares to a loss of $ 119k for the same period in 2020, an improvement of $ 443k. As I mentioned earlier, we became profitable in the third quarter of 2020 and we were able to make up for the losses in the first two quarters and show that profit at the end of the year. We expect 2021 profit to be over $ 2 million before P3 fee income which we should be able to grow quarter over quarter. Net interest income increased $ 903K or 112% in 2021 from 2020. Total non-interest expense increased from $ 350K to $ 1.5M for the period. three months ended March 31, 2021 compared to $ 1.2 million for the three-month period ended March 31, 2020. Excluding interest, revenues amounted to $ 176 thousand for the first quarter compared to $ 73 thousand at the same period last year. This is due to cables and ACH charges which are expected to continue to increase.
Total assets were approximately $ 252 million and $ 141 million respectively as of March 31, 2021 and 2020, representing growth of $ 111 million or 79%, and includes PPP loans of nearly $ 31 million. of dollars. The increase in total assets is attributable to growth of $ 61 million in loans and $ 50 million in cash, cash equivalents and investments. For the 12-month period ended March 31, 2020, significant growth was recorded in the following loan categories: $ 32 million commercial real estate, $ 13 million commercial real estate, $ 10 million multi-family real estate while l residential real estate was stable. Additionally, the company raised new shares by selling a mix of common and preferred shares for $ 14.8 million. Part of the equity was an exchange of debt securities of Trust Preferred Securities (“TruP”) last year for equity. We expect the TruPs to be completely shut down by the end of the second quarter. This enabled the Company to pursue its growth while maintaining its capital in accordance with regulatory standards. At this stage, capital is not an obstacle to the growth of the business. As noted in the past, the Company and the Bank are fortunate to benefit from broad boards of directors and access to capital.
To finance the growth of the Bank, it embarked on a major program of increasing maturity deposits such as checking and money market accounts. We increased 98% or $ 103.7 million from the end of the first quarter of 2020 to the end of the first quarter of 2021. This reduced the need to generate more expensive term deposit certificates (“CDs”). It also allowed the Bank to adjust prices to the current market which recently fell to almost zero percent. This performance improvement results from the balance sheet changes mentioned above. The increased liquidity also allows the Bank to respond quickly to the needs of borrowers. At the end of 2019, the Bank moved its branch located at 2477 E. Commercial Boulevard in Fort Lauderdale, Florida to a newer and more accessible location at 2929 E. Commercial Boulevard, Fort Lauderdale, Florida. We plan in 2021 to close the Plantation branch and open a new branch nearby.
I will conclude my comments with the following. We started a few years ago with a strategic plan that provided the roadmap for increased growth, revenue and fee income while balancing expenses. Once we got out of the enhanced regulatory review that drained management’s time and effort in 2019, we were able to raise additional capital and tackle the tasks we needed to accomplish to be successful. As we succeed, we will continue to push the goals further to improve our results and truly succeed in delivering returns to our shareholders.
We will continue to work hard and expect great things to happen in the future.
Moishe Gubin, President
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This statement contains forward-looking statements which can be identified by words 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 differ materially from any future results or that such statements involve These factors include, but are not limited to, our limited operating history, management of our expected growth, risks associated with the integration of acquired websites, possible inadvertent infringement of the intellectual property rights of third parties. , our ability to compete effectively, our acquisition strategy and a limited public market for our common shares, among other risks. Future results of OptimumBank Holdings, Inc. may also be affected by other risk factors listed from time to time in its filings with the SEC. Many factors are difficult to predict with precision and are generally beyond the control of the company. Forward-looking statements speak only as of the date on which they are made and OptimumBank Holdings, Inc. does not undertake to update forward-looking statements to reflect circumstances or events occurring after the date on which the forward-looking statements are made.
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