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  6. OptimumBank Holdings Inc (OPHC)

  7. OptimumBank Holdings Inc (OPHC) News

OPHC OptimumBank Holdings Inc

4.85
0.13 (2.75%)
04 Nov 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type
OptimumBank Holdings Inc NASDAQ:OPHC NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.13 2.75% 4.85 4.66 4.89 4.85 4.72 4.72 8,436 21:00:16

Form 10-Q - Quarterly report [Sections 13 or 15(d)]

09/08/2023 4:06pm

Edgar (US Regulatory)


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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 June 30, 2023

 

or

 

☐ 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)

 

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: 7,250,219 shares of common stock, $.01 par value, issued and outstanding as of August 9, 2023.

 

 

 

 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

INDEX

 

  Page
   
PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements 1
   
Condensed Consolidated Balance Sheets - June 30, 2023 (unaudited) and December 31, 2022 1
   
Condensed Consolidated Statements of Earnings – Three and Six Months ended June 30, 2023 and 2022 (unaudited) 2
   
Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and Six Months ended June 30, 2023 and 2022 (unaudited) 3
   
Condensed Consolidated Statements of Stockholders’ Equity – Three and Six Months ended June 30, 2023 and 2022 (unaudited) 4
   
Condensed Consolidated Statements of Cash Flows - Six Months ended June 30, 2023 and 2022 (unaudited) 5
   
Notes to Condensed Consolidated Financial Statements (unaudited) 6
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 25
   
Item 4. Controls and Procedures 31
   
PART II. OTHER INFORMATION  
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 31
   
Item 6. Exhibits 31
   
SIGNATURES 32

 

i
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share amounts)

 

   June 30,   December 31, 
   2023   2022 
    (Unaudited)      
Assets:          
Cash and due from banks  $11,852   $19,788 
Interest-bearing deposits with banks   66,521    52,048 
Total cash and cash equivalents   78,373    71,836 
           
Debt securities available for sale   24,762    25,102 
Debt securities held-to-maturity (fair value of $406 and $504)   445    540 
Loans, net of allowance for credit losses of $6,645 and $5,793   518,829    477,218 
Federal Home Loan Bank stock   717    600 
Premises and equipment, net   1,162    934 
Right-of-use lease assets   2,300    2,119 
Accrued interest receivable   1,559    1,444 
Deferred tax asset   3,091    3,836 
Other assets   1,275    1,590 
           
Total assets  $632,513   $585,219 
           
Liabilities and Stockholders’ Equity:          
           
Liabilities:          
Noninterest-bearing demand deposits  $215,326   $159,193 
Savings, NOW and money-market deposits   128,732    108,726 
Time deposits   207,573    239,980 
           
Total deposits   551,631    507,899 
           
Federal Home Loan Bank advances   10,000    10,000 
Official checks   67    110 
Operating lease liabilities   2,370    2,172 
Other liabilities   2,516    2,458 
           
Total liabilities   566,584    522,639 
           
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   —    — 
Common stock, $.01 par value; 10,000,000 shares authorized, 7,250,219 and 7,058,897 shares issued and outstanding   72    71 
Additional paid-in capital   91,221    90,408 
Accumulated deficit   (19,789)   (22,073)
Accumulated other comprehensive loss   (5,575)   (5,826)
           
Total stockholders’ equity   65,929    62,580 
Total liabilities and stockholders’ equity  $632,513   $585,219 

 

See accompanying notes to condensed consolidated financial statements.

 

1
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Earnings (Unaudited)

(in thousands, except per share amounts)

 

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
Interest income:                    
Loans  $7,252   $3,764   $13,841   $7,027 
Debt securities   172    159    350    322 
Other   755    102    1,504    139 
                     
Total interest income   8,179    4,025    15,695    7,488 
                     
Interest expense:                    
Deposits   2,556    170    4,988    345 
Borrowings   31    102    56    163 
                     
Total interest expense   2,587    272    5,044    508 
                     
Net interest income   5,592    3,753    10,651    6,980 
                     
Credit loss expense   704    991    1,524    1,383 
                     
Net interest income after credit loss expense   4,888    2,762    9,127    5,597 
                     
Noninterest income:                    
Service charges and fees   759    680    1,478    1,269 
Other   13    84    23    145 
                     
Total noninterest income   772    764    1,501    1,414 
                     
Noninterest expenses:                    
Salaries and employee benefits   2,041    1,307    4,007    2,642 
Professional fees   171    142    368    289 
Occupancy and equipment   188    175    377    342 
Data processing   385    285    751    562 
Regulatory assessment   224    23    433    100 
Litigation Settlement   375    —    375    — 
Other   518    328    1,013    665 
                     
Total noninterest expenses   3,902    2,260    7,324    4,600 
                     
Net earnings before income taxes   1,758    1,266    3,304    2,411 
                     
Income taxes   446    321    839    611 
                     
Net earnings  $1,312   $945   $2,465   $1,800 
                     
Net earnings per share - Basic and diluted  $0.18   $0.16   $0.34   $0.33 

 

See accompanying notes to condensed consolidated financial statements.

 

2
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

 

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
                 
Net earnings  $1,312   $945   $2,465   $1,800 
                     
Other comprehensive (loss) income:                    
Change in unrealized loss on debt securities:                    
Unrealized (loss) gain arising during the period   (380)   (3,124)   335    (5,905)
                     
Amortization of unrealized loss on debt securities transferred to held-to-maturity   1    4    2    11 
                     
Other comprehensive (loss) income before income taxes   (379)   (3,120)   337    (5,894)
                     
Deferred income taxes benefit (provision)   91    792    (85)   1,495 
                     
Total other comprehensive (loss) income   (288)   (2,328)   252    (4,399)
                     
Comprehensive income (loss)  $1,024   $(1,383)  $2,717   $(2,599)

 

See accompanying notes to condensed consolidated financial statements.

 

3
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity

Three and Six Months Ended June 30, 2023 and 2022

(Dollars in thousands)

 

   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Loss   Equity 
   Preferred Stock                     
   Series A   Series B   Common Stock  

Additional

Paid-In

    Accumulated   Accumulated Comprehensive   Stockholders 
   Shares   Amount   Shares   Amount   Shares   Amount   Capital   Deficit   Loss   Equity 
                                                   
Balance at December 31, 2021   —    —    760    —    4,775,281   $48   $65,193   $(26,096)  $(635)  $38,510 
                                                   
Proceeds from the sale of preferred stock (unaudited)   —    —    260    —    —    —    6500    —    —    6,500 
                                                   
Proceeds from the sale of common stock (unaudited)   —    —    —    —    1,227,331    12    5511    —    —    5,523 
                                                   
Net change in unrealized loss on debt securities available for sale (unaudited)   —    —    —    —    —    —    —    —    (2,078)   (2,078)
                                                   
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)   —    —    —    —    —    —    —    —    7    7 
                                                   
Net earnings for three months ended March 31, 2022 (unaudited)   —    —    —    —    —    —    —    855    —    855 
                                                   
Balance at March 31, 2022 (unaudited)   —    —    1,020    —    6,002,612   $60   $77,204   $(25,241)  $(2,706)  $49,317 
                                                   
Stock-based Compensation (unaudited)   —    —    —    —    24,493    —    96    —    —    96 
                                                   
Net change in unrealized loss on debt securities available for sale (unaudited)   —    —    —    —    —    —    —    —    (2,332)   (2,332)
                                                   
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited)   —    —    —    —    —    —    —    —    4    4 
                                                   
Net earnings (unaudited)   —    —    —    —    —    —    —    945    —    945 
                                                   
Balance at June 30, 2022 (unaudited)   —   $—    1,020   $—    6,027,105   $60   $77,300   $(24,296)  $(5,034)  $48,030 
                                                   
Balance at December 31, 2022   —   $—    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 for three months ended March 31, 2023 (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 

 

See accompanying notes to condensed consolidated financial statements.

 

4
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

   2023   2022 
   Six Months Ended 
   June 30, 
   2023   2022 
Cash flows from operating activities:          
Net earnings  $2,465   $1,800 
Adjustments to reconcile net earnings to net cash provided by operating activities:          
Credit loss expense   1,524    1,383 
Depreciation and amortization   115    115 
Deferred income taxes   734    613 
Net accretion of fees, premiums and discounts   11    (252)
Stock-based compensation expense   490    96 
Increase in accrued interest receivable   (115)   (26)
Amortization of right of use asset   134    217 
Net decrease in operating lease liabilities   (117)   (211)
Decrease (increase) in other assets   315    (332)
(Decrease) increase in official checks and other liabilities   (221)   1,050 
Net cash provided by operating activities   5,335    4,453 
           
Cash flows from investing activities:          
Principal repayments of debt securities available for sale   606    1,177 
Principal repayments of debt securities held-to-maturity   98    398 
Net increase in loans   (43,098)   (102,070)
Purchases of premises and equipment   (343)   (112)
Purchase of FHLB stock   (117)   (1,932)
           
Net cash used in investing activities   (42,854)   (102,539)
           
Cash flows from financing activities:          
Net increase in deposits   43,732    49,362 
Net increase in FHLB Advances   —    50,000 
Net change in repurchase agreements   —    5,000 
Proceeds from sale of preferred stock   —    6,500 
Proceeds from sale of common stock   324    5,523 
           
Net cash provided by financing activities   44,056    116,385 
           
Net increase in cash and cash equivalents   6,537    18,299 
           
Cash and cash equivalents at beginning of the period   71,836    58,970 
           
Cash and cash equivalents at end of the period  $78,373   $77,269 
           
Supplemental disclosure of cash flow information:          
Cash paid during the period for:          
Interest  $4,792   $473 
           
Income taxes  $395   $— 
           
Noncash transactions:          
Change in accumulated other comprehensive loss, net change in unrealized loss on debt securities available for sale, net of income taxes  $252   $(4,399)
           
Amortization of unrealized loss on debt securities transferred to held-to-maturity  $2   $11 
Reduction stockholders’ equity due to adoption of Topic 326, net   (181)   — 
Right-of use lease assets obtained in exchange for operating lease liabilities  $315   $— 
Increase in other liabilities for stock-based compensation  $—   $96 

 

See accompanying notes to condensed consolidated financial statements.

 

5
 

 

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 two banking offices located in Broward County, 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 June 30, 2023, and the results of operations and cash flows for the three and six month periods ended June 30, 2023 and 2022. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full year.

 

Comprehensive Income (Loss). 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 (loss).

 

Accumulated other comprehensive loss consists of the following (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Unrealized loss on debt securities available for sale  $(7,452)  $(7,786)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity   (16)   (18)
Income tax benefit   1,893    1,978 
           
Accumulated other comprehensive loss  $(5,575)  $(5,826)

 

Reclassifications. Certain amounts have been reclassified to allow for consistent presentation for the periods presented.

 

Adoption of New Accounting Standards. The Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments (collectively, Accounting Standards Codification 326), effective January 1, 2023. The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to certain off-balance sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credits, financial guarantees, and other similar instruments. In addition, Accounting Standards Codification 326 (“ASC 326”) made changes to the accounting for debt securities available for sale. One such change is to require credit losses to be presented as an allowance rather than as a write-down on debt securities available for sale that management does not intend to sell or believes that it is more likely than not, they will not be required to sell. ASC 326 also changed the accounting for purchased financial assets with credit deterioration.

 

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption of CECL resulted in the recognition of $219,000 allowance for credit losses, $23,000 of liability for unfunded commitments, a deferred income tax asset of $61,000 and a reduction in retained earnings of $181,000. With this transition method, the Company did not have to restate comparative prior periods presented in the consolidated financial statements related to ASC 326 but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses. The Company adopted ASC 326 using the prospective transition approach for debt securities available for sale. As of January 1, 2023, the Company did not have any allowance for credit losses on debt securities.

(continued)

 

6
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 

Allowance for Credit Losses (“ACL”). The following is a summary of the Company’s significant accounting policies with respect to ASC 326:

 

ACL - Debt Securities Available for Sale. Management uses a systematic methodology to determine its ACL for debt securities available for sale. Each quarter management evaluates impairment where there has been a decline in fair value below the amortized cost basis to determine whether there is a credit loss associated with the decline in fair value. The Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either one of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which the fair value is less than the amortized cost basis, among various other factors, including the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, an ACL is recorded, which is limited by the amount that the fair value is less than the amortized cost basis. Credit losses are calculated individually, rather than collectively. Any impairment that has not been recorded through an ACL is recognized in other comprehensive loss.

 

Changes in the ACL are recorded as credit loss expense (reversal). Losses are charged against the ACL when management believes the collectability of the debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

 

Management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the debt securities available for sale and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for debt securities available for sale recognized in accrued interest receivable was $169,000.

 

ACL – Debt Securities Held to Maturity. The Company measures expected credit losses on debt securities held to maturity on a collective basis by major security type. U.S. Government agency securities, Mortgage-backed securities and collateralized mortgage obligations are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Taxable municipal securities are highly rated by major credit agencies.

 

ACL - Loans. The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged-off against the ACL when management believes the uncollectability of a loan balance is confirmed and subsequent recoveries, if any, increase the ACL when they are recognized.

 

Management uses systematic methodologies to determine its ACL for loans and certain off- balance sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of the expected credit losses. Adjustments to historical loss information are made for the differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

 

The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses.

 

The Company’s ACL recorded in the balance sheet reflects management’s best estimate of expected credit losses. The Company recognizes in earnings the amount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s ACL is calculated using collectively evaluated and individually evaluated loans.

 

(continued)

 

7
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General, Continued.

 

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments for analysis. The Company’s ACL is measured based on FDIC call report codes as these types of loans exhibit similar risk characteristics. The loan portfolio is further segmented by loan product type, collateral codes, occupancy codes, property code or lien position and are representative of the manner in which the Company lends.

 

The ACL for each segment is measured through the use of the average charge-off method. In accordance with the average charge-off method, an annual loss rate is applied to the amortized cost of an asset or pool of assets over the remaining expected life. The annual loss rate consists of historical and forecasted loss components. The forecasted component is applied using loss rates from historical periods that management believes are representative of economic conditions over a full economic cycle. For certain loan segments with limited credit loss histories, management determined the loss experience of peer banks provides the best basis for its assessment of expected credit losses. Other loan segments with more established loss histories utilize historical loss experience of the Company. Management determined that the appropriate historical loss period will begin in the first quarter of 2001 and continue through the most recent quarter, which represents a full peak to peak economic cycle. Additionally, management has determined that the Company’s reasonable and supportable forecast period is one year.

 

Included in its systematic methodology to determine its ACL, management considers the need to qualitatively adjust model results for risk factors that are not considered within the Company’s loss estimation process but are nonetheless relevant in assessing the expected credit losses within our loan pools.

 

These qualitative factors (“Q-Factors”) may increase or decrease management’s estimate of expected credit losses by a calculated percentage based upon the estimated level of risk. The various risks that may be considered in making Q-Factor adjustments include, among other things, the impact of 1) changes in lending policies and procedures, including changes in underwriting standards; 2) changes in international, national, regional and local economic conditions; 3) changes in the volume and severity of past due and nonaccrual status; 4) the effect of any concentrations of credit and changes in the levels of such concentrations; 5) changes in the experience, depth, and ability of lending management; 6) changes in nature and volume of the portfolio; 7) trends in underlying collateral values; 8) changes in the quality of the loan review system and 9) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses.

 

The annual loss rates, as defined above, adjusted for Q-Factors, are applied to the amortized loan balances over each subsequent period and aggregated to arrive at the General ACL. The amortized loan balances are adjusted based on management’s estimate of loan repayments in future periods.

 

When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine whether it should be included in another segment or should be individually evaluated. Under ASC 326, the Company has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining ACL. A Specific ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for selling costs, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the expected credit loss to the extent their credit profile improves and that the repayment terms were not considered to be unique to the asset.

 

Management measures expected credit losses over the contractual term of a loan. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

 

  ● Management has a reasonable expectation at the reporting date that a loan modification will be executed with an individual borrower.
     
  ● The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

 

(continued)

 

8
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 

The Company follows its nonaccrual policy by reversing contractual interest income in the consolidated statements of income when the Company places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for loans was $1,377,000.

 

Also, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to recognize additions to the allowance for credit losses based on their judgments of information available to them at the time of their examination.

 

Prior to the adoption of ASC 326, the allowance for loan losses represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for loan losses included allowance allocations calculated in accordance with ASC 310, “Receivables” and allowance allocations calculated in accordance with ASC 450, “Contingencies.”

 

ACL - Off -Balance Sheet Credit Exposures. The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include commitments to extend credit, standby letters of credit, and unfunded commitments under revolving lines of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Management has determined that a majority of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.

 

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their expected lives. Management used its judgement to determinate funding rates. Management applied the funding rates, along with the loss factor rate determined for each pooled loan segment, to unfunded loan commitments, excluding unconditionally cancellable exposures and letters of credit, to arrive at the reserve for unfunded loan commitments.

 

As of June 30, 2023, the liability recorded for expected credit losses on unfunded commitments was $236,000 and is included in “other liabilities” on the accompanying condensed consolidated balance sheets. The current adjustment to the ACL for unfunded commitments is recognized through credit loss expense in the condensed consolidated statements of earnings.

 

(continued)

 

9
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2) Debt Securities. Debt Securities have been classified according to management’s intent. The carrying amount of debt securities and approximate fair values are as follows (in thousands):

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At June 30, 2023:                    
Available for sale:                    
SBA Pool Securities  $775   $      1   $(17)  $759 
Collateralized mortgage obligations   139    —    (15)   124 
Taxable municipal securities   16,710    —    (4,699)   12,011 
Mortgage-backed securities   14,589    —    (2,721)   11,868 
Total  $32,213   $1   $(7,452)  $24,762 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $415   $—   $(39)  $376 
Mortgage-backed securities   30    —    —    30 
Total  $445   $—   $(39)  $406 

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At December 31, 2022:                    
Available for sale:                    
SBA Pool Securities  $834   $         1   $(18)  $817 
Collateralized mortgage obligations   145    —    (15)   130 
Taxable municipal securities   16,729    —    (5,109)   11,620 
Mortgage-backed securities   15,180    —    (2,645)   12,535 
Total  $32,888   $1   $(7,787)  $25,102 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $475   $—   $(35)  $440 
Mortgage-backed securities   65    —    (1)   64 
Total  $540   $—   $(36)  $504 

 

There were no sales of debt securities during the six months ended June 30, 2023, and 2022.

 

(continued)

 

10
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2)Debt Securities, Continued.

 

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):

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At June 30, 2023:                    
Available for Sale:                    
SBA Pool Securities  $17   $607   $      —   $— 
Collateralized mortgage obligation   15    124    —    — 
Taxable municipal securities   4,699    12,012    —    — 
Mortgage-backed securities   2,721    11,868    —    — 
Total  $7,452   $24,611   $—   $— 

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At December 31, 2022:                    
Available for Sale :                    
SBA Pool Securities  $18   $657   $       —   $— 
Collateralized mortgage obligation   —    —    15    130 
Taxable municipal securities   5,109    11,620    —    — 
Mortgage-backed securities   2,621    12,292    24    243 
Total  $7,748   $24,569   $39   $373 

 

(continued)

 

11
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2)Debt Securities, Continued.

 

At June 30, 2023 and December 31, 2022, the unrealized losses on forty-two and forty investment debt securities, respectively, were caused by interest-rate changes.

 

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, 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 June 30, 2023 and December 31, 2022 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of June 30, 2023 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.

 

(continued)

 

12
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans. The segments of loans are as follows (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Residential real estate  $60,273   $50,354 
Multi-family real estate   69,518    69,555 
Commercial real estate   321,814    310,695 
Land and construction   27,019    17,286 
Commercial   6,950    5,165 
Consumer   40,686    30,323 
           
Total loans   526,260    483,378 
           
Deduct:          
Net deferred loan fees, and costs   (786)   (367)
Allowance for credit losses   (6,645)   (5,793)
           
Loans, net  $518,829   $477,218 

 

An analysis of the change in the allowance for credit losses follows (in thousands):

Schedule of Changes in Allowance for Loan Losses 

   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
   Residential   Multi-Family   Commercial   Land and          
   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
Three Months Ended June 30, 2023:                                   
                                    
Balance March 31, 2023  $742   $1,077   $3,030   $533   $26   $945   $6,353 
Credit loss expense (income)   141    (40)   (228)   147    38    487    545 
Charge-offs   —    —    —    —    (16)   (367)   (383)
Recoveries   —    —    —    —    87    43    130 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Three Months Ended June 30, 2022:                                   
Beginning balance  $575   $549   $1,607   $79   $68   $530   $3,408 
(Credit) provision for loan losses   (61)   70    733    (8)   33    224    991 
Charge-offs   —    —    —    —    (90)   (136)   (226)
Recoveries   —    —    —    —    56    14    70 
                                    
Ending balance (June 30, 2022)  $514   $619   $2,340   $71   $67   $632   $4,243 
                                    
Six Months Ended June 30, 2023:                                   
                                    
Beginning balance Dec 31, 2022  $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 31, 2023  $801   $1,075   $2,895   $451   $15   $774   $6,011 
Credit loss expense (income)   82    (38)   (93)   229    75    1,056    1,311 
Charge-offs   —    —    —    —    (42)   (804)   (846)
Recoveries   —    —    —    —    87    82    169 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Six Months Ended June 30, 2022:                                   
                                    
Beginning balance  $482   $535   $1,535   $32   $74   $417   $3,075 
Provision for loan losses   32    84    805    39    27    396    1,383 
Charge-offs   —    —    —    —    (90)   (209)   (299)
Recoveries   —    —    —    —    56    28    84 
                                    
Ending balance  $514   $619   $2,340   $71   $67   $632   $4,243 

 

13
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

                             
   Residential   Multi-Family   Commercial                 
   Real
Estate		   Real
Estate		  

Real
Estate

   Land and Construction   Commercial   Consumer   Total 
                             
At December 31, 2022:                                   
Individually evaluated for impairment:                                   
Recorded investment  $—   $—   $—   $—   $—   $—   $— 
Balance in allowance for loan losses  $—   $—   $—   $—   $—   $—   $— 
                                    
Collectively evaluated for impairment:                                   
Recorded investment  $50,354   $69,555   $310,695   $17,286   $5,165   $30,323   $483,378 
Balance in allowance for loan losses  $768   $748   $3,262   $173   $277   $565   $5,793 

 

(continued) 

 

14
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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:

 

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)

 

15
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued. The following summarizes the loan credit quality (in thousands):

 

                              
   Pass   OLEM

(Other Loans Especially

Mentioned)

  

Sub-

Standard

   Doubtful   Loss   Total 
At December 31, 2022:                              
Residential real estate  $50,354   $—   $—   $—   $—   $50,354 
Multi-family real estate   69,555    —    —    —    —    69,555 
Commercial real estate   309,458    —    1,237    —    —    310,695 
Land and construction   17,286    —    —    —    —    17,286 
Commercial   5,165    —    —    —    —    5,165 
Consumer   30,323    —    —    —    —    30,323 
                               
Total  $482,141   $—   $1,237   $—   $—   $483,378 

 

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 loan 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 effected in the future. The Company fully charges off any loan classified as loss.

 

(continued)

 

16
 

 

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):

   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 June 30, 2023:                                   
Residential real estate  $—   $—   $—   $—   $60,273   $      —   $60,273 
Multi-family real estate   1,259    —    —    1,259    68,259    —    69,518 
Commercial real estate   —    —    —    —    321,814    —    321,814 
Land and construction   —    —    —    —    27,019    —    27,019 
Commercial   —    —    —    —    6,950    —    6,950 
Consumer   347    158    —    505    40,181    —    40,686 
                                    
Total  $1,606   $158   $—   $1,764   $524,496   $—   $   526,260 

 

   Accruing Loans         
 

30-59 Days

Past

Due

  

60-89

Days

Past

Due

  

Greater

Than 90 Days

Past

Due

  

Total

Past

Due

   Current  

Nonaccrual

Loans

  

Total

Loans

 
At December 31, 2022:                                   
Residential real estate  $—   $—   $—   $—   $50,354   $     —   $50,354 
Multi-family real estate   —    —    —    —    69,555    —    69,555 
Commercial real estate   —    —    —    —    310,695    —    310,695 
Land and construction   —    —    —    —    17,286    —    17,286 
Commercial   —    —    —    —    5,165    —    5,165 
Consumer   150    27    —    177    30,146    —    30,323 
                                    
Total  $150   $27   $—   $177   $483,201   $—   $  483,378 

 

  The Company has not made any modifications of loans to borrowers experiencing financial difficulties during the six months ended June 30, 2023.
   
  No loans have been determined to be troubled debt restructurings (TDR’s) during the six-month period ended June 30, 2022. At June 30, 2023 and 2022, there were no loans modified and entered into as TDR’s within the past twelve months, that subsequently defaulted during the six-month periods ended June 30, 2022.

 

(continued)

 

17
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Term Loans

Amortized Cost Basis by Origination Year

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
land and construction 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass  $       6,406   $15,136   $2,324   $1,509   $1,644   $-   $      -   $         -   $27,019 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $6,406   $15,136   $2,324   $1,509   $1,644   $-   $-   $-   $27,019 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Residential real estate                                             
Pass  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 

 

(continued)

 

18
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Term Loans

Amortized Cost Basis by Origination Year

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
Multi-family real estate 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $               -     $ 69,518  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $ -     $ 69,518  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 12,815     $ 16,218     $ -     $ -     $ 320,592  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       1,222       -       -       -       1,222  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 14,037     $ 16,218     $ -     $ -     $ 321,814  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
Current period Gross charge-offs   $ (16 )    $ -     $ -     $ -     $ -     $ (26 )   $ -     $ -     $ (42 )
Consumer                                                                        
Pass   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
Current period Gross charge-offs   $ (30 )   $ (505 )   $ (266 )   $ (3 )   $ -     $ -     $ -     $ -     $ (804 )

 

(continued)

 

19
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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 six-months periods ended June 30, 2023 and 2022, basic and diluted earnings per share is the same as there were no outstanding potentially dilutive securities. Earnings per common share have been computed based on the following:

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
Weighted-average number of common shares outstanding used to calculate basic and diluted earnings per common share  $7,250,219   $6,007,484   $7,226,953   $5,455,406 

 

(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 June 30, 2023, 539,320 shares remain available for grant.

 

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

 

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

 

(continued)

 

20
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(6) Fair Value Measurements.

 

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

 

                
       Fair Value Measurements Using 
   Fair Value  

Quoted Prices

In Active Markets for

Identical Assets

(Level 1)

  

Significant

Other Observable

Inputs

(Level 2)

  

 

Significant

Unobservable

Inputs

(Level 3)

 
At June 30, 2023:                    
SBA Pool Securities  $759   $  —   $759    — 
Collateralized mortgage obligations   124    —    124    — 
Taxable municipal securities   12,011    —    12,011    — 
Mortgage-backed securities   11,868    —    11,868    — 
Total  $24,762    —   $24,762    — 
                     
At December 31, 2022:                    
SBA Pool Securities  $817   $—   $817    — 
Collateralized mortgage obligations   130    —    130    — 
Taxable municipal securities   11,620    —    11,620    — 
Mortgage-backed securities   12,535    —    12,535    — 
Total  $25,102    —   $25,102    — 

 

(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):

 

   At June 30, 2023   At December 31, 2022 
   Carrying Amount   Fair Value   Level   Carrying Amount   Fair Value   Level 
                         
Financial assets:                              
Cash and cash equivalents  $78,373   $78,373    1   $71,836   $71,836    1 
Debt securities available for sale   24,762    24,762    2    25,102    25,102    2 
Debt securities held-to-maturity   445    406    2    540    504    2 
Loans   518,829    512,031    3    477,218    476,566    3 
Federal Home Loan Bank stock   717    717    3    600    600    3 
Accrued interest receivable   1,559    1,559    3    1,444    1,444    3 
                               
Financial liabilities:                              
Deposit liabilities   551,631    556,017    3    507,899    512,357    3 
Federal Home Loan Bank advances   10,000    9,456    3    10,000    9,450    3 
Off-balance sheet financial instruments   —    —    3    —    —    3 

 

(continued)

 

21
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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 June 30, 2023 follows (in thousands):

 

     
Commitments to extend credit  $32,184 
      
Unused lines of credit  $56,272 
      
Standby letters of credit  $4,313 

 

(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.

 

(continued)

 

22
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(9) Regulatory Matters, Continued.

 

As of June 30, 2023 and December 31, 2022, 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):

 

   Actual   To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework) 
   Amount   %   Amount   % 
As of June 30, 2023:                
Tier 1 Capital to Total Assets   69,234    11.20%   55,616    9.00%
                     
As of December 31, 2022:                    
Tier 1 Capital to Total Assets   66,291    11.29%   52,865    9.00%

 

(continued)

 

23
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(10) Series B Preferred Stock

 

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 June 30, 2023 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 had 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 series 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.

 

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.

 

(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.

 

During the three-months ended June 30, 2023 the Company incurred a one-time expense relate to the settlement of a foreclosure litigation in the amount of $375,000.

 

(continued)

 

24
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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, 2022, 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.

 

On the loan side, we intend to continue our focus on increasing our multi-family, non-owner occupied, commercial real estate, and skilled nursing facility loan portfolios. As to deposits, we are focused on 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 continue to emphasize and build upon initiatives focused on strengthening credit oversight and credit administrative processes and procedures. Moreover, management continues to identify loan growth opportunities that are designed to improve overall profitability without sacrificing credit quality and underwriting standards. This growth oriented 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 third quarter of 2023, the Bank plans to offer 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. So, loans and revenue they may produce will be without any increased expense, other than servicing fees.

 

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.

 

Capital Levels

 

As of June 30, 2023, the Bank is well capitalized under regulatory guidelines.

 

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

 

(continued)

 

25
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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

 

Financial Condition at June 30, 2023 and December 31, 2022

 

Overview

 

The Company’s total assets increased by approximately $47 million to $633 million at June 30, 2023, from $585 million at December 31, 2022, 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. Net loans grew by $42 million to $519 million and deposits grew by approximately $44 million to $552 million at June 30, 2023, from $477 million and $508 million at December 31, 2022. Total stockholders’ equity increased by approximately $3 million to $66 million at June 30, 2023, from $63 million at December 31, 2022, primarily due to net earnings, proceeds from common stock sales and changes in unrealized loss on debt securities available for sale.

 

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

 

   Six Months Ended   Year Ended 
   June 30, 2023   December 31, 2022 
         
Average equity as a percentage of average assets   10.6%   9.9%
           
Equity to total assets at end of period   10.4%   10.7%
           
Return on average assets (1)   0.8%   0.9%
           
Return on average equity (1)   7.6%   8.6%
           
Noninterest expenses to average assets (1)   2.4%   2.1%

 

(1) Annualized for the six months ended June 30, 2023.

 

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, the use of Federal Funds markets, net earnings, and loans taken out at the Federal Reserve Bank discount window.

 

Deposits are our primary source of funds. In order to increase its core deposits, the Company has priced its deposit rates competitively. The Company will adjust rates on its deposits to attract or retain deposits as needed.

 

The Company increased deposits by approximately $44 million during the six-month period ended June 30, 2023. The proceeds were used to originate new loans.

 

In addition to obtaining funds from depositors, the Company may borrow funds from other financial institutions. At June 30, 2023, the Company had outstanding borrowings of $10 million, against its $155 million in established borrowing capacity. with the FHLB. The Company’s borrowing facility is subject to collateral and stock ownership requirements, as well as prior FHLB consent to each advance. At June 30, 2023, the Company also had available lines of credit amounting to $25 million with six correspondent banks to purchase federal funds. Disbursements on the lines of credit are subject to the approval of the correspondent banks. The Company has an available discount window credit line with the Federal Reserve Bank, currently $12 million. The Federal Reserve Bank line is subject to collateral requirements. We measure and monitor our liquidity daily and believe our liquidity sources are adequate to meet our operating needs.

 

Off-Balance Sheet Arrangements

 

Refer to Note 8 in the condensed consolidated financial statements for Off-Balance Sheet Arrangements.

 

(continued)

 

26
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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

 

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 June 30,  
    2023     2022  
          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   $ 515,342     $ 7,252       5.63 %   $ 297,472     $ 3,764       5.06 %
Securities     25,656       172       2.68 %     29,944       159       2.12 %
Other (1)     58,552       755       5.16 %     44,235       102       0.92 %
                                                 
Total interest-earning assets/interest income     599,550       8,179       5.46 %     371,651       4,025       4.33 %
                                                 
Cash and due from banks     12,929                       15,264                  
Premises and equipment     1,154                       863                  
Other     5,330                       5,010                  
                                                 
Total assets   $ 618,963                     $ 392,788                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 129,890       395       1.22 %   $ 154,365       125       0.32 %
Time deposits     229,376       2,161       3.77 %     15,958       45       1.13 %
Borrowings (2)     10,330       31       1.20 %     24,649       102       1.66 %
                                                 
Total interest-bearing liabilities/interest expense     369,596       2,587       2.80 %     194,972       272       0.56 %
                                                 
Noninterest-bearing demand deposits     179,050                       146,579                  
Other liabilities     5,105                       2,521                  
Stockholders’ equity     65,212                       48,716                  
                                                 
Total liabilities and stockholders’ equity   $ 618,963                     $ 392,788                  
                                                 
Net interest income           $ 5,592                     $ 3,753          
                                                 
Interest rate spread (3)                     2.66 %                     3.77 %
                                                 
Net interest margin (4)                     3.73 %                     4.04 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.62                       1.91                  

 

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

 

27
 

 

    Six Months Ended June 30,  
    2023     2022  
          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   $ 504,000     $ 13,841       5.49 %   $ 280,957     $ 7,027       5.00 %
Securities     25,766       350       2.72 %     32,026       322       2.01 %
Other (1)     59,801       1,504       5.03 %     57,933       139       0.48 %
                                                 
Total interest-earning assets/interest income     589,567       15,695       5.32 %     370,916       7,488       4.04 %
                                                 
Cash and due from banks     14,939                       15,277                  
Premises and equipment     1,072                       861                  
Other     5,753                       4,850                  
                                                 
Total assets   $ 611,331                     $ 391,904                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 125,834       666       1.06 %   $ 168,478       286       0.34 %
Time deposits     233,957       4,322       3.69 %     14,097       59       0.84 %
Borrowings (2)     10,248       56       1.09 %     21,324       163       1.53 %
                                                 
Total interest-bearing liabilities/interest expense     370,039       5,044       2.73 %     203,899       508       0.50 %
                                                 
Noninterest-bearing demand deposits     172,065                       141,927                  
Other liabilities     4,808                       2,598                  
Stockholders’ equity     64,419                       43,480                  
                                                 
Total liabilities and stockholders’ equity   $ 611,331                     $ 391,904                  
                                                 
Net interest income           $ 10,651                     $ 6,980          
                                                 
Interest rate spread (3)                     2.59 %                     3.54 %
                                                 
Net interest margin (4)                     3.61 %                     3.76 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.59                       1.82                  

 

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

 

28
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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

 

Comparison of the Three-Month Periods Ended June 30, 2023, and 2022

 

   Three Months Ended   Increase / 
   June 30,   (Decrease) 
(dollars in thousands)  2023   2022   Amount   Percentage 
Total interest income  $8,179   $4,025   $4,154    103%
Total interest expense   2,587    272    2,315    851%
Net interest income   5,592    3,753    1,839    49%
Credit loss expense   704    991    (287)   -29%
Net interest income after provision for loan losses   4,888    2,762    2,126    77%
Total noninterest income   772    764    8    1%
Total noninterest expenses   3,902    2,260    1,642    73%
Net earnings before income taxes   1,758    1,266    492    39%
Income taxes   446    321    125    39%
Net earnings  $1,312   $945    367    39%
Net earnings per share - Basic and diluted  $0.18   $0.16           

 

Net earnings. Net earnings for the three months ended June 30, 2023, were $1,312,000 or $.18 per basic and diluted share compared to net earnings of $945,000 or $.16 per basic and diluted share for the three months ended June 30, 2022. The increase in net earnings during the three months ended June 30, 2023 compared to three months ended June 30, 2022 is primarily attributed to an increase in net interest income and non-interest income, partially offset by the increase in non-interest expense.

 

Interest income. Interest income increased $4.2 million for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 due primarily to growth in the loan portfolio and increases in yields on interest earning assets.

 

Interest expense. Interest expense increased $2.3 million to $2.6 million for the three months ended June 30, 2023, compared to the three months ended June 30, 2022, primarily due to interest bearing deposit rates and changes in the composition of deposits.

 

Credit loss expense. Expected credit loss expense was $704,000 for the three months ended June 30, 2023, compared to $991,000 for the three months ended June 30, 2022. 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 $6.6 million or 1.26% of loans outstanding at June 30, 2023, compared to $5.8 million or 1.20% of loans outstanding at December 31, 2022. The increase in the credit loss expense during the second quarter of 2023 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the three-months ended June 30, 2023, the net charge off amounting to $253,000 arose mostly due to consumer lending for the three-month ended June 30, 2023.

 

Noninterest income. Total noninterest income increased to $772,000 for the three months ended June 30, 2023, from $764,000 for the three months ended June 30, 2022, due to increased wire transfer and ACH fees during second quarter of 2023.

 

Noninterest expenses. Total noninterest expenses increased to $3.9 million for the three months ended June 30, 2023, compared to $2.3 million for the three months ended June 30, 2022, primarily due to one-time litigation settlement, increase in salaries and employee benefits, data processing, and other operating costs.

 

29
 

 

Comparison of the Six-Month Periods Ended June 30, 2023 and 2022

 

   Six Months Ended   Increase / 
   June 30,   (Decrease) 
(dollars in thousands)  2023   2022   Amount   Percentage 
Total interest income  $15,695   $7,488   $8,207    110%
Total interest expense   5,044    508    4,536    893%
Net interest income   10,651    6,980    3,671    53%
Credit loss expense   1,524    1,383    141    10%
Net interest income after provision for loan losses   9,127    5,597    3,530    63%
Total noninterest income   1,501    1,414    87    6%
Total noninterest expenses   7,324    4,600    2,724    59%
Net earnings before income taxes   3,304    2,411    893    37%
Income taxes   839    611    228    37%
Net earnings  $2,465   $1,800    665    37%
Net earnings per share - Basic and diluted  $0.34   $0.33           

 

Net earnings. Net earnings for the six months ended June 30, 2023, was $2,465,000 or $.34 per basic and diluted share compared to net earnings of $1,800,000 or $.33 per basic and diluted share for the six months ended June 30, 2022. The increase in net earnings during the six months ended June 30, 2023 compared to six months ended June 30, 2022 is primarily attributed to an increase in net interest income, partially offset by the increase in noninterest expense.

 

Interest Income. Interest income increased $8.2 million for the six months ended June 30, 2023 compared to the six months ended June 30, 2022 due primarily to growth in the loan portfolio and increase in loan and fed funds yields.

 

Interest Expense. Interest expense increased $4.5 million to $5.0 million for the six months ended June 30, 2023 compared to the six-months ended June 30, 2022 as a result of an increase in deposits and rates.

 

Credit loss expense. Expected credit loss expense was $1.5 million for the six months ended June 30, 2023, compared to $1.4 million for the six months ended June 30, 2022. The allowance for credit losses totaled $6.6 million or 1.26% of loans outstanding at June 30, 2023, compared to $5.8 million or 1.20% of loans outstanding at December 31, 2022. The increase in the credit loss expense during the six months ended June 30, 2023 was primarily due to loan volume growth and the evaluation of the other factors noted above. During the six-months ended June 30, 2023, the net charge off amounting to $677,000 arose mostly due to consumer lending for the six month ended June 30, 2023.

 

Noninterest Income. Total noninterest income increased to $1.5 million for the six months ended June 30, 2023, from $1.4 million for the six months ended June 30, 2022 due to increased wire transfer and ACH fees related to an increase in business checking accounts during the six-month period ended June 30, 2023.

 

Noninterest Expenses. Total noninterest expenses increased to $7.3 million for the six months ended June 30, 2023 compared to $4.6 million for the six months ended June 30, 2022 primarily due to one-time litigation settlement, increase in salaries and employee benefits, data processing, and other operating costs.

 

30
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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 June 30, 2023, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the first six months of 2023, the Company issued 72,221 shares of its common stock in a private placement transaction to two accredited investors at a price of $4.50 per share. None of these investors was an officer, director or affiliate of the Company. The Company issued these shares in reliance on Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.

 

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.

 

31
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

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: August 9, 2023 By: /s/ Timothy Terry
    Timothy Terry
    Principal Executive Officer
     
  By: /s/ Joel Klein
    Joel Klein
    Principal Financial Officer

 

32
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
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)

 

33

 

 

EXHIBIT 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

REQUIRED BY RULE 13A-14(A)/15D-14(A)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: August 9, 2023

 

 

 

EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

REQUIRED BY RULE 13A-14(A)/15D-14(A)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, nor misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Joel Klein
  Joel Klein
  Principal Financial Officer
  Date: August 9, 2023

 

 

 

EXHIBIT 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, as the Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: August 9, 2023

 

 

 

EXHIBIT 32.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, as the Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

 

  /s/ Joel Klein
  Joel Klein
  Principal Financial Officer
  Date: August 9, 2023

 

 

v3.23.2
Cover - shares
 6 Months Ended
Jun. 30, 2023
Aug. 09, 2023
Cover [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Quarterly Report true  
Document Transition Report false  
Document Period End Date Jun. 30, 2023  
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2023  
Current Fiscal Year End Date --12-31  
Entity File Number 000-50755  
Entity Registrant Name OPTIMUMBANK HOLDINGS, INC.  
Entity Central Index Key 0001288855  
Entity Tax Identification Number 55-0865043  
Entity Incorporation, State or Country Code FL  
Entity Address, Address Line One 2929 East Commercial Boulevard  
Entity Address, City or Town Fort Lauderdale  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33308  
City Area Code 954  
Local Phone Number 900-2800  
Title of 12(b) Security Common Stock, $.01 Par Value  
Trading Symbol OPHC  
Security Exchange Name NASDAQ  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   7,250,219
v3.23.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Assets:    
Cash and due from banks $ 11,852 $ 19,788
Interest-bearing deposits with banks 66,521 52,048
Total cash and cash equivalents 78,373 71,836
Debt securities available for sale 24,762 25,102
Debt securities held-to-maturity (fair value of $406 and $504) 445 540
Loans, net of allowance for credit losses of $6,645 and $5,793 518,829 477,218
Federal Home Loan Bank stock 717 600
Premises and equipment, net 1,162 934
Right-of-use lease assets 2,300 2,119
Accrued interest receivable 1,559 1,444
Deferred tax asset 3,091 3,836
Other assets 1,275 1,590
Total assets 632,513 585,219
Liabilities:    
Noninterest-bearing demand deposits 215,326 159,193
Savings, NOW and money-market deposits 128,732 108,726
Time deposits 207,573 239,980
Total deposits 551,631 507,899
Federal Home Loan Bank advances 10,000 10,000
Official checks 67 110
Operating lease liabilities 2,370 2,172
Other liabilities 2,516 2,458
Total liabilities 566,584 522,639
Commitments and contingencies (Notes 8 and 11)
Stockholders’ equity:    
Preferred stock, value
Common stock, $.01 par value; 10,000,000 shares authorized, 7,250,219 and 7,058,897 shares issued and outstanding 72 71
Additional paid-in capital 91,221 90,408
Accumulated deficit (19,789) (22,073)
Accumulated other comprehensive loss (5,575) (5,826)
Total stockholders’ equity 65,929 62,580
Total liabilities and stockholders’ equity 632,513 585,219
Series A Preferred Stock [Member]    
Stockholders’ equity:    
Preferred stock, value
Series B Preferred Stock [Member]    
Stockholders’ equity:    
Preferred stock, value
v3.23.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Debt securities held to maturity, fair value $ 406 $ 504
Loans, allowance for loan losses $ 6,645 $ 5,793
Preferred stock, par value $ 0 $ 0
Preferred stock, shares authorized 6,000,000 6,000,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 10,000,000 10,000,000
Common stock, shares issued 7,250,219 7,058,897
Common stock, shares outstanding 7,250,219 7,058,897
Series A Preferred Stock [Member]    
Preferred stock, par value $ 0 $ 0
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Series B Preferred Stock [Member]    
Preferred stock, par value $ 0 $ 0
Preferred stock, shares authorized 1,520 1,520
Preferred stock, shares issued 1,360 1,360
Preferred stock, shares outstanding 1,360 1,360
v3.23.2
Condensed Consolidated Statements of Earnings (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Interest income:        
Loans $ 7,252 $ 3,764 $ 13,841 $ 7,027
Debt securities 172 159 350 322
Other 755 102 1,504 139
Total interest income 8,179 4,025 15,695 7,488
Interest expense:        
Deposits 2,556 170 4,988 345
Borrowings 31 102 56 163
Total interest expense 2,587 272 5,044 508
Net interest income 5,592 3,753 10,651 6,980
Credit loss expense 704 991 1,524 1,383
Net interest income after credit loss expense 4,888 2,762 9,127 5,597
Noninterest income:        
Service charges and fees 759 680 1,478 1,269
Other 13 84 23 145
Total noninterest income 772 764 1,501 1,414
Noninterest expenses:        
Salaries and employee benefits 2,041 1,307 4,007 2,642
Professional fees 171 142 368 289
Occupancy and equipment 188 175 377 342
Data processing 385 285 751 562
Regulatory assessment 224 23 433 100
Litigation Settlement 375 375
Other 518 328 1,013 665
Total noninterest expenses 3,902 2,260 7,324 4,600
Net earnings before income taxes 1,758 1,266 3,304 2,411
Income taxes 446 321 839 611
Net earnings $ 1,312 $ 945 $ 2,465 $ 1,800
Net earnings per share - Basic $ 0.18 $ 0.16 $ 0.34 $ 0.33
Net earnings per share - Diluted $ 0.18 $ 0.16 $ 0.34 $ 0.33
v3.23.2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Income Statement [Abstract]        
Net earnings $ 1,312 $ 945 $ 2,465 $ 1,800
Change in unrealized loss on debt securities:        
Unrealized (loss) gain arising during the period (380) (3,124) 335 (5,905)
Amortization of unrealized loss on debt securities transferred to held-to-maturity 1 4 2 11
Other comprehensive (loss) income before income taxes (379) (3,120) 337 (5,894)
Deferred income taxes benefit (provision) 91 792 (85) 1,495
Total other comprehensive (loss) income (288) (2,328) 252 (4,399)
Comprehensive income (loss) $ 1,024 $ (1,383) $ 2,717 $ (2,599)
v3.23.2
Condensed Consolidated Statements of Stockholders' Equity - USD ($)
$ in Thousands
Preferred Stock [Member]
Series A Preferred Stock [Member]
Preferred Stock [Member]
Series B Preferred Stock [Member]
Common Stock [Member]
Additional Paid-in Capital [Member]
Retained Earnings [Member]
AOCI Attributable to Parent [Member]
Total
Balance at Dec. 31, 2021 $ 48 $ 65,193 $ (26,096) $ (635) $ 38,510
Balance, shares at Dec. 31, 2021 760 4,775,281        
Proceeds from the sale of preferred stock (unaudited) 6,500 6,500
Proceeds from the sale of preferred stock (unaudited), shares   260          
Proceeds from the sale of common stock (unaudited) $ 12 5,511 5,523
Proceeds from the sale of common stock (unaudited), shares     1,227,331        
Net change in unrealized loss on debt securities available for sale (unaudited) (2,078) (2,078)
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited) 7 7
Net earnings (unaudited) 855 855
Balance at Mar. 31, 2022 $ 60 77,204 (25,241) (2,706) 49,317
Balance, shares at Mar. 31, 2022 1,020 6,002,612        
Balance at Dec. 31, 2021 $ 48 65,193 (26,096) (635) 38,510
Balance, shares at Dec. 31, 2021 760 4,775,281        
Net earnings (unaudited)             1,800
Balance at Jun. 30, 2022 $ 60 77,300 (24,296) (5,034) 48,030
Balance, shares at Jun. 30, 2022 1,020 6,027,105        
Balance at Mar. 31, 2022 $ 60 77,204 (25,241) (2,706) 49,317
Balance, shares at Mar. 31, 2022 1,020 6,002,612        
Net change in unrealized loss on debt securities available for sale (unaudited) (2,332) (2,332)
Amortization of unrealized loss on debt securities transferred to held-to-maturity (unaudited) 4 4
Net earnings (unaudited) 945 945
Stock-based Compensation (unaudited) 96 96
Stock-based compensation (unaudited), shares     24,493        
Balance at Jun. 30, 2022 $ 60 77,300 (24,296) (5,034) 48,030
Balance, shares at Jun. 30, 2022 1,020 6,027,105        
Balance at Dec. 31, 2022 $ 71 90,408 (22,073) (5,826) 62,580
Balance, shares at Dec. 31, 2022 1,360 7,058,897        
Proceeds from the sale of common stock (unaudited) 324 324
Proceeds from the sale of common stock (unaudited), shares     72,221        
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
Stock-based Compensation (unaudited) $ 1 489 490
Stock-based compensation (unaudited), shares     119,101        
Additional allowance recognized due to adoption of Topic 326 (181) (181)
Balance at Mar. 31, 2023 $ 72 91,221 (21,101) (5,287) 64,905
Balance, shares at Mar. 31, 2023 1,360 7,250,219        
Balance at Dec. 31, 2022 $ 71 90,408 (22,073) (5,826) 62,580
Balance, shares at Dec. 31, 2022 1,360 7,058,897        
Net earnings (unaudited)             2,465
Balance at Jun. 30, 2023 $ 72 91,221 (19,789) (5,575) 65,929
Balance, shares at Jun. 30, 2023 1,360 7,250,219        
Balance at Mar. 31, 2023 $ 72 91,221 (21,101) (5,287) 64,905
Balance, shares at Mar. 31, 2023 1,360 7,250,219        
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 Jun. 30, 2023 $ 72 $ 91,221 $ (19,789) $ (5,575) $ 65,929
Balance, shares at Jun. 30, 2023 1,360 7,250,219        
v3.23.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Cash flows from operating activities:    
Net earnings $ 2,465 $ 1,800
Adjustments to reconcile net earnings to net cash provided by operating activities:    
Credit loss expense 1,524 1,383
Depreciation and amortization 115 115
Deferred income taxes 734 613
Net accretion of fees, premiums and discounts 11 (252)
Stock-based compensation expense 490 96
Increase in accrued interest receivable (115) (26)
Amortization of right of use asset 134 217
Net decrease in operating lease liabilities (117) (211)
Decrease (increase) in other assets 315 (332)
(Decrease) increase in official checks and other liabilities (221) 1,050
Net cash provided by operating activities 5,335 4,453
Cash flows from investing activities:    
Principal repayments of debt securities available for sale 606 1,177
Principal repayments of debt securities held-to-maturity 98 398
Net increase in loans (43,098) (102,070)
Purchases of premises and equipment (343) (112)
Purchase of FHLB stock (117) (1,932)
Net cash used in investing activities (42,854) (102,539)
Cash flows from financing activities:    
Net increase in deposits 43,732 49,362
Net increase in FHLB Advances 50,000
Net change in repurchase agreements 5,000
Proceeds from sale of preferred stock 6,500
Proceeds from sale of common stock 324 5,523
Net cash provided by financing activities 44,056 116,385
Net increase in cash and cash equivalents 6,537 18,299
Cash and cash equivalents at beginning of the period 71,836 58,970
Cash and cash equivalents at end of the period 78,373 77,269
Cash paid during the period for:    
Interest 4,792 473
Income taxes 395
Noncash transactions:    
Change in accumulated other comprehensive loss, net change in unrealized loss on debt securities available for sale, net of income taxes 252 (4,399)
Amortization of unrealized loss on debt securities transferred to held-to-maturity 2 11
Reduction stockholders’ equity due to adoption of Topic 326, net (181)
Right-of use lease assets obtained in exchange for operating lease liabilities 315
Increase in other liabilities for stock-based compensation $ 96
v3.23.2
General
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
General

(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 two banking offices located in Broward County, 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 June 30, 2023, and the results of operations and cash flows for the three and six month periods ended June 30, 2023 and 2022. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full year.

 

Comprehensive Income (Loss). 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 (loss).

 

Accumulated other comprehensive loss consists of the following (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Unrealized loss on debt securities available for sale  $(7,452)  $(7,786)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity   (16)   (18)
Income tax benefit   1,893    1,978 
           
Accumulated other comprehensive loss  $(5,575)  $(5,826)

 

Reclassifications. Certain amounts have been reclassified to allow for consistent presentation for the periods presented.

 

Adoption of New Accounting Standards. The Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments (collectively, Accounting Standards Codification 326), effective January 1, 2023. The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to certain off-balance sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credits, financial guarantees, and other similar instruments. In addition, Accounting Standards Codification 326 (“ASC 326”) made changes to the accounting for debt securities available for sale. One such change is to require credit losses to be presented as an allowance rather than as a write-down on debt securities available for sale that management does not intend to sell or believes that it is more likely than not, they will not be required to sell. ASC 326 also changed the accounting for purchased financial assets with credit deterioration.

 

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption of CECL resulted in the recognition of $219,000 allowance for credit losses, $23,000 of liability for unfunded commitments, a deferred income tax asset of $61,000 and a reduction in retained earnings of $181,000. With this transition method, the Company did not have to restate comparative prior periods presented in the consolidated financial statements related to ASC 326 but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses. The Company adopted ASC 326 using the prospective transition approach for debt securities available for sale. As of January 1, 2023, the Company did not have any allowance for credit losses on debt securities.

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 

Allowance for Credit Losses (“ACL”). The following is a summary of the Company’s significant accounting policies with respect to ASC 326:

 

ACL - Debt Securities Available for Sale. Management uses a systematic methodology to determine its ACL for debt securities available for sale. Each quarter management evaluates impairment where there has been a decline in fair value below the amortized cost basis to determine whether there is a credit loss associated with the decline in fair value. The Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either one of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which the fair value is less than the amortized cost basis, among various other factors, including the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, an ACL is recorded, which is limited by the amount that the fair value is less than the amortized cost basis. Credit losses are calculated individually, rather than collectively. Any impairment that has not been recorded through an ACL is recognized in other comprehensive loss.

 

Changes in the ACL are recorded as credit loss expense (reversal). Losses are charged against the ACL when management believes the collectability of the debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

 

Management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the debt securities available for sale and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for debt securities available for sale recognized in accrued interest receivable was $169,000.

 

ACL – Debt Securities Held to Maturity. The Company measures expected credit losses on debt securities held to maturity on a collective basis by major security type. U.S. Government agency securities, Mortgage-backed securities and collateralized mortgage obligations are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Taxable municipal securities are highly rated by major credit agencies.

 

ACL - Loans. The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged-off against the ACL when management believes the uncollectability of a loan balance is confirmed and subsequent recoveries, if any, increase the ACL when they are recognized.

 

Management uses systematic methodologies to determine its ACL for loans and certain off- balance sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of the expected credit losses. Adjustments to historical loss information are made for the differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

 

The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses.

 

The Company’s ACL recorded in the balance sheet reflects management’s best estimate of expected credit losses. The Company recognizes in earnings the amount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s ACL is calculated using collectively evaluated and individually evaluated loans.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General, Continued.

 

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments for analysis. The Company’s ACL is measured based on FDIC call report codes as these types of loans exhibit similar risk characteristics. The loan portfolio is further segmented by loan product type, collateral codes, occupancy codes, property code or lien position and are representative of the manner in which the Company lends.

 

The ACL for each segment is measured through the use of the average charge-off method. In accordance with the average charge-off method, an annual loss rate is applied to the amortized cost of an asset or pool of assets over the remaining expected life. The annual loss rate consists of historical and forecasted loss components. The forecasted component is applied using loss rates from historical periods that management believes are representative of economic conditions over a full economic cycle. For certain loan segments with limited credit loss histories, management determined the loss experience of peer banks provides the best basis for its assessment of expected credit losses. Other loan segments with more established loss histories utilize historical loss experience of the Company. Management determined that the appropriate historical loss period will begin in the first quarter of 2001 and continue through the most recent quarter, which represents a full peak to peak economic cycle. Additionally, management has determined that the Company’s reasonable and supportable forecast period is one year.

 

Included in its systematic methodology to determine its ACL, management considers the need to qualitatively adjust model results for risk factors that are not considered within the Company’s loss estimation process but are nonetheless relevant in assessing the expected credit losses within our loan pools.

 

These qualitative factors (“Q-Factors”) may increase or decrease management’s estimate of expected credit losses by a calculated percentage based upon the estimated level of risk. The various risks that may be considered in making Q-Factor adjustments include, among other things, the impact of 1) changes in lending policies and procedures, including changes in underwriting standards; 2) changes in international, national, regional and local economic conditions; 3) changes in the volume and severity of past due and nonaccrual status; 4) the effect of any concentrations of credit and changes in the levels of such concentrations; 5) changes in the experience, depth, and ability of lending management; 6) changes in nature and volume of the portfolio; 7) trends in underlying collateral values; 8) changes in the quality of the loan review system and 9) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses.

 

The annual loss rates, as defined above, adjusted for Q-Factors, are applied to the amortized loan balances over each subsequent period and aggregated to arrive at the General ACL. The amortized loan balances are adjusted based on management’s estimate of loan repayments in future periods.

 

When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine whether it should be included in another segment or should be individually evaluated. Under ASC 326, the Company has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining ACL. A Specific ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for selling costs, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the expected credit loss to the extent their credit profile improves and that the repayment terms were not considered to be unique to the asset.

 

Management measures expected credit losses over the contractual term of a loan. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

 

  ● Management has a reasonable expectation at the reporting date that a loan modification will be executed with an individual borrower.
     
  ● The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 

The Company follows its nonaccrual policy by reversing contractual interest income in the consolidated statements of income when the Company places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for loans was $1,377,000.

 

Also, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to recognize additions to the allowance for credit losses based on their judgments of information available to them at the time of their examination.

 

Prior to the adoption of ASC 326, the allowance for loan losses represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for loan losses included allowance allocations calculated in accordance with ASC 310, “Receivables” and allowance allocations calculated in accordance with ASC 450, “Contingencies.”

 

ACL - Off -Balance Sheet Credit Exposures. The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include commitments to extend credit, standby letters of credit, and unfunded commitments under revolving lines of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Management has determined that a majority of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.

 

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their expected lives. Management used its judgement to determinate funding rates. Management applied the funding rates, along with the loss factor rate determined for each pooled loan segment, to unfunded loan commitments, excluding unconditionally cancellable exposures and letters of credit, to arrive at the reserve for unfunded loan commitments.

 

As of June 30, 2023, the liability recorded for expected credit losses on unfunded commitments was $236,000 and is included in “other liabilities” on the accompanying condensed consolidated balance sheets. The current adjustment to the ACL for unfunded commitments is recognized through credit loss expense in the condensed consolidated statements of earnings.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Debt Securities
 6 Months Ended
Jun. 30, 2023
Debt Securities  
Debt Securities

(2) Debt Securities. Debt Securities have been classified according to management’s intent. The carrying amount of debt securities and approximate fair values are as follows (in thousands):

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At June 30, 2023:                    
Available for sale:                    
SBA Pool Securities  $775   $      1   $(17)  $759 
Collateralized mortgage obligations   139    —    (15)   124 
Taxable municipal securities   16,710    —    (4,699)   12,011 
Mortgage-backed securities   14,589    —    (2,721)   11,868 
Total  $32,213   $1   $(7,452)  $24,762 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $415   $—   $(39)  $376 
Mortgage-backed securities   30    —    —    30 
Total  $445   $—   $(39)  $406 

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At December 31, 2022:                    
Available for sale:                    
SBA Pool Securities  $834   $         1   $(18)  $817 
Collateralized mortgage obligations   145    —    (15)   130 
Taxable municipal securities   16,729    —    (5,109)   11,620 
Mortgage-backed securities   15,180    —    (2,645)   12,535 
Total  $32,888   $1   $(7,787)  $25,102 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $475   $—   $(35)  $440 
Mortgage-backed securities   65    —    (1)   64 
Total  $540   $—   $(36)  $504 

 

There were no sales of debt securities during the six months ended June 30, 2023, and 2022.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2)Debt Securities, Continued.

 

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):

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At June 30, 2023:                    
Available for Sale:                    
SBA Pool Securities  $17   $607   $      —   $— 
Collateralized mortgage obligation   15    124    —    — 
Taxable municipal securities   4,699    12,012    —    — 
Mortgage-backed securities   2,721    11,868    —    — 
Total  $7,452   $24,611   $—   $— 

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At December 31, 2022:                    
Available for Sale :                    
SBA Pool Securities  $18   $657   $       —   $— 
Collateralized mortgage obligation   —    —    15    130 
Taxable municipal securities   5,109    11,620    —    — 
Mortgage-backed securities   2,621    12,292    24    243 
Total  $7,748   $24,569   $39   $373 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2)Debt Securities, Continued.

 

At June 30, 2023 and December 31, 2022, the unrealized losses on forty-two and forty investment debt securities, respectively, were caused by interest-rate changes.

 

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, 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 June 30, 2023 and December 31, 2022 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of June 30, 2023 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.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Loans
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Loans

(3) Loans. The segments of loans are as follows (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Residential real estate  $60,273   $50,354 
Multi-family real estate   69,518    69,555 
Commercial real estate   321,814    310,695 
Land and construction   27,019    17,286 
Commercial   6,950    5,165 
Consumer   40,686    30,323 
           
Total loans   526,260    483,378 
           
Deduct:          
Net deferred loan fees, and costs   (786)   (367)
Allowance for credit losses   (6,645)   (5,793)
           
Loans, net  $518,829   $477,218 

 

An analysis of the change in the allowance for credit losses follows (in thousands):

Schedule of Changes in Allowance for Loan Losses 

   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
   Residential   Multi-Family   Commercial   Land and          
   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
Three Months Ended June 30, 2023:                                   
                                    
Balance March 31, 2023  $742   $1,077   $3,030   $533   $26   $945   $6,353 
Credit loss expense (income)   141    (40)   (228)   147    38    487    545 
Charge-offs   —    —    —    —    (16)   (367)   (383)
Recoveries   —    —    —    —    87    43    130 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Three Months Ended June 30, 2022:                                   
Beginning balance  $575   $549   $1,607   $79   $68   $530   $3,408 
(Credit) provision for loan losses   (61)   70    733    (8)   33    224    991 
Charge-offs   —    —    —    —    (90)   (136)   (226)
Recoveries   —    —    —    —    56    14    70 
                                    
Ending balance (June 30, 2022)  $514   $619   $2,340   $71   $67   $632   $4,243 
                                    
Six Months Ended June 30, 2023:                                   
                                    
Beginning balance Dec 31, 2022  $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 31, 2023  $801   $1,075   $2,895   $451   $15   $774   $6,011 
Credit loss expense (income)   82    (38)   (93)   229    75    1,056    1,311 
Charge-offs   —    —    —    —    (42)   (804)   (846)
Recoveries   —    —    —    —    87    82    169 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Six Months Ended June 30, 2022:                                   
                                    
Beginning balance  $482   $535   $1,535   $32   $74   $417   $3,075 
Provision for loan losses   32    84    805    39    27    396    1,383 
Charge-offs   —    —    —    —    (90)   (209)   (299)
Recoveries   —    —    —    —    56    28    84 
                                    
Ending balance  $514   $619   $2,340   $71   $67   $632   $4,243 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

                             
   Residential   Multi-Family   Commercial                 
   Real
Estate		   Real
Estate		  

Real
Estate

   Land and Construction   Commercial   Consumer   Total 
                             
At December 31, 2022:                                   
Individually evaluated for impairment:                                   
Recorded investment  $—   $—   $—   $—   $—   $—   $— 
Balance in allowance for loan losses  $—   $—   $—   $—   $—   $—   $— 
                                    
Collectively evaluated for impairment:                                   
Recorded investment  $50,354   $69,555   $310,695   $17,286   $5,165   $30,323   $483,378 
Balance in allowance for loan losses  $768   $748   $3,262   $173   $277   $565   $5,793 

 

(continued) 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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:

 

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. The following summarizes the loan credit quality (in thousands):

 

                              
   Pass   OLEM

(Other Loans Especially

Mentioned)

  

Sub-

Standard

   Doubtful   Loss   Total 
At December 31, 2022:                              
Residential real estate  $50,354   $—   $—   $—   $—   $50,354 
Multi-family real estate   69,555    —    —    —    —    69,555 
Commercial real estate   309,458    —    1,237    —    —    310,695 
Land and construction   17,286    —    —    —    —    17,286 
Commercial   5,165    —    —    —    —    5,165 
Consumer   30,323    —    —    —    —    30,323 
                               
Total  $482,141   $—   $1,237   $—   $—   $483,378 

 

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 loan 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 effected in the future. The Company fully charges off any loan classified as loss.

 

(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):

   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 June 30, 2023:                                   
Residential real estate  $—   $—   $—   $—   $60,273   $      —   $60,273 
Multi-family real estate   1,259    —    —    1,259    68,259    —    69,518 
Commercial real estate   —    —    —    —    321,814    —    321,814 
Land and construction   —    —    —    —    27,019    —    27,019 
Commercial   —    —    —    —    6,950    —    6,950 
Consumer   347    158    —    505    40,181    —    40,686 
                                    
Total  $1,606   $158   $—   $1,764   $524,496   $—   $   526,260 

 

   Accruing Loans         
 

30-59 Days

Past

Due

  

60-89

Days

Past

Due

  

Greater

Than 90 Days

Past

Due

  

Total

Past

Due

   Current  

Nonaccrual

Loans

  

Total

Loans

 
At December 31, 2022:                                   
Residential real estate  $—   $—   $—   $—   $50,354   $     —   $50,354 
Multi-family real estate   —    —    —    —    69,555    —    69,555 
Commercial real estate   —    —    —    —    310,695    —    310,695 
Land and construction   —    —    —    —    17,286    —    17,286 
Commercial   —    —    —    —    5,165    —    5,165 
Consumer   150    27    —    177    30,146    —    30,323 
                                    
Total  $150   $27   $—   $177   $483,201   $—   $  483,378 

 

  The Company has not made any modifications of loans to borrowers experiencing financial difficulties during the six months ended June 30, 2023.
   
  No loans have been determined to be troubled debt restructurings (TDR’s) during the six-month period ended June 30, 2022. At June 30, 2023 and 2022, there were no loans modified and entered into as TDR’s within the past twelve months, that subsequently defaulted during the six-month periods ended June 30, 2022.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Term Loans

Amortized Cost Basis by Origination Year

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
land and construction 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass  $       6,406   $15,136   $2,324   $1,509   $1,644   $-   $      -   $         -   $27,019 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $6,406   $15,136   $2,324   $1,509   $1,644   $-   $-   $-   $27,019 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Residential real estate                                             
Pass  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Term Loans

Amortized Cost Basis by Origination Year

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
Multi-family real estate 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $               -     $ 69,518  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $ -     $ 69,518  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 12,815     $ 16,218     $ -     $ -     $ 320,592  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       1,222       -       -       -       1,222  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 14,037     $ 16,218     $ -     $ -     $ 321,814  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
Current period Gross charge-offs   $ (16 )    $ -     $ -     $ -     $ -     $ (26 )   $ -     $ -     $ (42 )
Consumer                                                                        
Pass   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
Current period Gross charge-offs   $ (30 )   $ (505 )   $ (266 )   $ (3 )   $ -     $ -     $ -     $ -     $ (804 )

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Earnings Per Share
 6 Months Ended
Jun. 30, 2023
Earnings Per Share [Abstract]  
Earnings Per Share

(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 six-months periods ended June 30, 2023 and 2022, basic and diluted earnings per share is the same as there were no outstanding potentially dilutive securities. Earnings per common share have been computed based on the following:

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
Weighted-average number of common shares outstanding used to calculate basic and diluted earnings per common share  $7,250,219   $6,007,484   $7,226,953   $5,455,406 

 
v3.23.2
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

(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 June 30, 2023, 539,320 shares remain available for grant.

 

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

 

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

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Measurements

(6) Fair Value Measurements.

 

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

 

                
       Fair Value Measurements Using 
   Fair Value  

Quoted Prices

In Active Markets for

Identical Assets

(Level 1)

  

Significant

Other Observable

Inputs

(Level 2)

  

 

Significant

Unobservable

Inputs

(Level 3)

 
At June 30, 2023:                    
SBA Pool Securities  $759   $  —   $759    — 
Collateralized mortgage obligations   124    —    124    — 
Taxable municipal securities   12,011    —    12,011    — 
Mortgage-backed securities   11,868    —    11,868    — 
Total  $24,762    —   $24,762    — 
                     
At December 31, 2022:                    
SBA Pool Securities  $817   $—   $817    — 
Collateralized mortgage obligations   130    —    130    — 
Taxable municipal securities   11,620    —    11,620    — 
Mortgage-backed securities   12,535    —    12,535    — 
Total  $25,102    —   $25,102    — 

 
v3.23.2
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2023
Investments, All Other Investments [Abstract]  
Fair Value of Financial Instruments

(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):

 

   At June 30, 2023   At December 31, 2022 
   Carrying Amount   Fair Value   Level   Carrying Amount   Fair Value   Level 
                         
Financial assets:                              
Cash and cash equivalents  $78,373   $78,373    1   $71,836   $71,836    1 
Debt securities available for sale   24,762    24,762    2    25,102    25,102    2 
Debt securities held-to-maturity   445    406    2    540    504    2 
Loans   518,829    512,031    3    477,218    476,566    3 
Federal Home Loan Bank stock   717    717    3    600    600    3 
Accrued interest receivable   1,559    1,559    3    1,444    1,444    3 
                               
Financial liabilities:                              
Deposit liabilities   551,631    556,017    3    507,899    512,357    3 
Federal Home Loan Bank advances   10,000    9,456    3    10,000    9,450    3 
Off-balance sheet financial instruments   —    —    3    —    —    3 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Off- Balance Sheet Financial Instruments
 6 Months Ended
Jun. 30, 2023
Off- Balance Sheet Financial Instruments  
Off- Balance Sheet Financial Instruments

(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 June 30, 2023 follows (in thousands):

 

     
Commitments to extend credit  $32,184 
      
Unused lines of credit  $56,272 
      
Standby letters of credit  $4,313 

 
v3.23.2
Regulatory Matters
 6 Months Ended
Jun. 30, 2023
Regulatory Matters

(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.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(9) Regulatory Matters, Continued.

 

As of June 30, 2023 and December 31, 2022, 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):

 

   Actual   To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework) 
   Amount   %   Amount   % 
As of June 30, 2023:                
Tier 1 Capital to Total Assets   69,234    11.20%   55,616    9.00%
                     
As of December 31, 2022:                    
Tier 1 Capital to Total Assets   66,291    11.29%   52,865    9.00%

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Series B Preferred Stock
 6 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Series B Preferred Stock

(10) Series B Preferred Stock

 

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 June 30, 2023 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 had 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 series 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.

 

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.

 
v3.23.2
Contingencies
 6 Months Ended
Jun. 30, 2023
Commitments and Contingencies Disclosure [Abstract]  
Contingencies

(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.

 

During the three-months ended June 30, 2023 the Company incurred a one-time expense relate to the settlement of a foreclosure litigation in the amount of $375,000.
v3.23.2
General (Policies)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Basis of Presentation

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 June 30, 2023, and the results of operations and cash flows for the three and six month periods ended June 30, 2023 and 2022. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six months ended June 30, 2023, are not necessarily indicative of the results to be expected for the full year.

 
Comprehensive Income (Loss)

Comprehensive Income (Loss). 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 (loss).

 

Accumulated other comprehensive loss consists of the following (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Unrealized loss on debt securities available for sale  $(7,452)  $(7,786)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity   (16)   (18)
Income tax benefit   1,893    1,978 
           
Accumulated other comprehensive loss  $(5,575)  $(5,826)

 
Reclassifications

Reclassifications. Certain amounts have been reclassified to allow for consistent presentation for the periods presented.

 
Adoption of New Accounting Standards

Adoption of New Accounting Standards. The Company adopted Accounting Standards Update 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, and the related amendments (collectively, Accounting Standards Codification 326), effective January 1, 2023. The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to certain off-balance sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credits, financial guarantees, and other similar instruments. In addition, Accounting Standards Codification 326 (“ASC 326”) made changes to the accounting for debt securities available for sale. One such change is to require credit losses to be presented as an allowance rather than as a write-down on debt securities available for sale that management does not intend to sell or believes that it is more likely than not, they will not be required to sell. ASC 326 also changed the accounting for purchased financial assets with credit deterioration.

 

The Company adopted ASC 326 using the modified retrospective method for all financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for reporting periods beginning after January 1, 2023 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. The adoption of CECL resulted in the recognition of $219,000 allowance for credit losses, $23,000 of liability for unfunded commitments, a deferred income tax asset of $61,000 and a reduction in retained earnings of $181,000. With this transition method, the Company did not have to restate comparative prior periods presented in the consolidated financial statements related to ASC 326 but will present comparative prior periods disclosures using the previous accounting guidance for the allowance for loan losses. The Company adopted ASC 326 using the prospective transition approach for debt securities available for sale. As of January 1, 2023, the Company did not have any allowance for credit losses on debt securities.

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 
Allowance for Credit Losses (“ACL”)

Allowance for Credit Losses (“ACL”). The following is a summary of the Company’s significant accounting policies with respect to ASC 326:

 

ACL - Debt Securities Available for Sale. Management uses a systematic methodology to determine its ACL for debt securities available for sale. Each quarter management evaluates impairment where there has been a decline in fair value below the amortized cost basis to determine whether there is a credit loss associated with the decline in fair value. The Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either one of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which the fair value is less than the amortized cost basis, among various other factors, including the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, an ACL is recorded, which is limited by the amount that the fair value is less than the amortized cost basis. Credit losses are calculated individually, rather than collectively. Any impairment that has not been recorded through an ACL is recognized in other comprehensive loss.

 

Changes in the ACL are recorded as credit loss expense (reversal). Losses are charged against the ACL when management believes the collectability of the debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

 

Management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the debt securities available for sale and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for debt securities available for sale recognized in accrued interest receivable was $169,000.

 

ACL – Debt Securities Held to Maturity. The Company measures expected credit losses on debt securities held to maturity on a collective basis by major security type. U.S. Government agency securities, Mortgage-backed securities and collateralized mortgage obligations are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. Taxable municipal securities are highly rated by major credit agencies.

 

ACL - Loans. The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. The Company records loans charged-off against the ACL when management believes the uncollectability of a loan balance is confirmed and subsequent recoveries, if any, increase the ACL when they are recognized.

 

Management uses systematic methodologies to determine its ACL for loans and certain off- balance sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management estimates the ACL using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of the expected credit losses. Adjustments to historical loss information are made for the differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors.

 

The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses.

 

The Company’s ACL recorded in the balance sheet reflects management’s best estimate of expected credit losses. The Company recognizes in earnings the amount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s ACL is calculated using collectively evaluated and individually evaluated loans.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General, Continued.

 

The ACL is measured on a collective pool basis when similar risk characteristics exist. Loans with similar risk characteristics are grouped into homogenous segments for analysis. The Company’s ACL is measured based on FDIC call report codes as these types of loans exhibit similar risk characteristics. The loan portfolio is further segmented by loan product type, collateral codes, occupancy codes, property code or lien position and are representative of the manner in which the Company lends.

 

The ACL for each segment is measured through the use of the average charge-off method. In accordance with the average charge-off method, an annual loss rate is applied to the amortized cost of an asset or pool of assets over the remaining expected life. The annual loss rate consists of historical and forecasted loss components. The forecasted component is applied using loss rates from historical periods that management believes are representative of economic conditions over a full economic cycle. For certain loan segments with limited credit loss histories, management determined the loss experience of peer banks provides the best basis for its assessment of expected credit losses. Other loan segments with more established loss histories utilize historical loss experience of the Company. Management determined that the appropriate historical loss period will begin in the first quarter of 2001 and continue through the most recent quarter, which represents a full peak to peak economic cycle. Additionally, management has determined that the Company’s reasonable and supportable forecast period is one year.

 

Included in its systematic methodology to determine its ACL, management considers the need to qualitatively adjust model results for risk factors that are not considered within the Company’s loss estimation process but are nonetheless relevant in assessing the expected credit losses within our loan pools.

 

These qualitative factors (“Q-Factors”) may increase or decrease management’s estimate of expected credit losses by a calculated percentage based upon the estimated level of risk. The various risks that may be considered in making Q-Factor adjustments include, among other things, the impact of 1) changes in lending policies and procedures, including changes in underwriting standards; 2) changes in international, national, regional and local economic conditions; 3) changes in the volume and severity of past due and nonaccrual status; 4) the effect of any concentrations of credit and changes in the levels of such concentrations; 5) changes in the experience, depth, and ability of lending management; 6) changes in nature and volume of the portfolio; 7) trends in underlying collateral values; 8) changes in the quality of the loan review system and 9) the effect of other external factors (i.e., competition, legal and regulatory requirements) on the level of estimated credit losses.

 

The annual loss rates, as defined above, adjusted for Q-Factors, are applied to the amortized loan balances over each subsequent period and aggregated to arrive at the General ACL. The amortized loan balances are adjusted based on management’s estimate of loan repayments in future periods.

 

When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine whether it should be included in another segment or should be individually evaluated. Under ASC 326, the Company has adopted the collateral maintenance practical expedient to measure the ACL based on the fair value of collateral. Collateral dependent loans are loans for which the repayment is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. These loans do not share common risk characteristics and are not included within the collectively evaluated loans for determining ACL. A Specific ACL is calculated on an individual loan basis based on the shortfall between the fair value of the loan’s collateral, which is adjusted for selling costs, and amortized cost. If the fair value of the collateral exceeds the amortized cost, no allowance is required. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the expected credit loss to the extent their credit profile improves and that the repayment terms were not considered to be unique to the asset.

 

Management measures expected credit losses over the contractual term of a loan. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:

 

  ● Management has a reasonable expectation at the reporting date that a loan modification will be executed with an individual borrower.
     
  ● The extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1)General, Continued.

 

The Company follows its nonaccrual policy by reversing contractual interest income in the consolidated statements of income when the Company places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an ACL on accrued interest receivable. As of June 30, 2023, the accrued interest receivable for loans was $1,377,000.

 

Also, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for credit losses. Such agencies may require the Company to recognize additions to the allowance for credit losses based on their judgments of information available to them at the time of their examination.

 

Prior to the adoption of ASC 326, the allowance for loan losses represented management’s best estimate of inherent losses that had been incurred within the existing portfolio of loans. The allowance for loan losses included allowance allocations calculated in accordance with ASC 310, “Receivables” and allowance allocations calculated in accordance with ASC 450, “Contingencies.”

 

ACL - Off -Balance Sheet Credit Exposures. The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include commitments to extend credit, standby letters of credit, and unfunded commitments under revolving lines of credit. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. Management has determined that a majority of the Company’s off-balance-sheet credit exposures are not unconditionally cancellable.

 

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over their expected lives. Management used its judgement to determinate funding rates. Management applied the funding rates, along with the loss factor rate determined for each pooled loan segment, to unfunded loan commitments, excluding unconditionally cancellable exposures and letters of credit, to arrive at the reserve for unfunded loan commitments.

 

As of June 30, 2023, the liability recorded for expected credit losses on unfunded commitments was $236,000 and is included in “other liabilities” on the accompanying condensed consolidated balance sheets. The current adjustment to the ACL for unfunded commitments is recognized through credit loss expense in the condensed consolidated statements of earnings.
v3.23.2
General (Tables)
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following (in thousands):

   June 30,   December 31, 
   2023   2022 
         
Unrealized loss on debt securities available for sale  $(7,452)  $(7,786)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity   (16)   (18)
Income tax benefit   1,893    1,978 
           
Accumulated other comprehensive loss  $(5,575)  $(5,826)
v3.23.2
Debt Securities (Tables)
 6 Months Ended
Jun. 30, 2023
Debt Securities  
Schedule of Amortized Cost and Approximate Fair Values of Debt Securities

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At June 30, 2023:                    
Available for sale:                    
SBA Pool Securities  $775   $      1   $(17)  $759 
Collateralized mortgage obligations   139    —    (15)   124 
Taxable municipal securities   16,710    —    (4,699)   12,011 
Mortgage-backed securities   14,589    —    (2,721)   11,868 
Total  $32,213   $1   $(7,452)  $24,762 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $415   $—   $(39)  $376 
Mortgage-backed securities   30    —    —    30 
Total  $445   $—   $(39)  $406 

 

       Gross   Gross     
   Amortized   Unrealized   Unrealized   Fair 
   Cost   Gains   Losses   Value 
                 
At December 31, 2022:                    
Available for sale:                    
SBA Pool Securities  $834   $         1   $(18)  $817 
Collateralized mortgage obligations   145    —    (15)   130 
Taxable municipal securities   16,729    —    (5,109)   11,620 
Mortgage-backed securities   15,180    —    (2,645)   12,535 
Total  $32,888   $1   $(7,787)  $25,102 
                     
Held-to-maturity:                    
Collateralized mortgage obligations  $475   $—   $(35)  $440 
Mortgage-backed securities   65    —    (1)   64 
Total  $540   $—   $(36)  $504 
Schedule of Debt Securities Available for Sale with Gross Unrealized Losses, by Investment Category

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):

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At June 30, 2023:                    
Available for Sale:                    
SBA Pool Securities  $17   $607   $      —   $— 
Collateralized mortgage obligation   15    124    —    — 
Taxable municipal securities   4,699    12,012    —    — 
Mortgage-backed securities   2,721    11,868    —    — 
Total  $7,452   $24,611   $—   $— 

 

   Over Twelve Months   Less Than Twelve Months 
   Gross       Gross     
   Unrealized   Fair   Unrealized   Fair 
   Losses   Value   Losses   Value 
At December 31, 2022:                    
Available for Sale :                    
SBA Pool Securities  $18   $657   $       —   $— 
Collateralized mortgage obligation   —    —    15    130 
Taxable municipal securities   5,109    11,620    —    — 
Mortgage-backed securities   2,621    12,292    24    243 
Total  $7,748   $24,569   $39   $373 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(2)Debt Securities, Continued.

 

At June 30, 2023 and December 31, 2022, the unrealized losses on forty-two and forty investment debt securities, respectively, were caused by interest-rate changes.

 

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, 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 June 30, 2023 and December 31, 2022 all municipal securities were rated as investment grade. All debt securities in an unrealized loss position as of June 30, 2023 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.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 
v3.23.2
Loans (Tables)
 6 Months Ended
Jun. 30, 2023
Receivables [Abstract]  
Schedule of Components of Loans

   June 30,   December 31, 
   2023   2022 
         
Residential real estate  $60,273   $50,354 
Multi-family real estate   69,518    69,555 
Commercial real estate   321,814    310,695 
Land and construction   27,019    17,286 
Commercial   6,950    5,165 
Consumer   40,686    30,323 
           
Total loans   526,260    483,378 
           
Deduct:          
Net deferred loan fees, and costs   (786)   (367)
Allowance for credit losses   (6,645)   (5,793)
           
Loans, net  $518,829   $477,218 
Schedule of Changes in Allowance for Loan Losses

An analysis of the change in the allowance for credit losses follows (in thousands):

Schedule of Changes in Allowance for Loan Losses 

   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
   Residential   Multi-Family   Commercial   Land and          
   Real Estate   Real Estate   Real Estate   Construction   Commercial   Consumer   Total 
Three Months Ended June 30, 2023:                                   
                                    
Balance March 31, 2023  $742   $1,077   $3,030   $533   $26   $945   $6,353 
Credit loss expense (income)   141    (40)   (228)   147    38    487    545 
Charge-offs   —    —    —    —    (16)   (367)   (383)
Recoveries   —    —    —    —    87    43    130 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Three Months Ended June 30, 2022:                                   
Beginning balance  $575   $549   $1,607   $79   $68   $530   $3,408 
(Credit) provision for loan losses   (61)   70    733    (8)   33    224    991 
Charge-offs   —    —    —    —    (90)   (136)   (226)
Recoveries   —    —    —    —    56    14    70 
                                    
Ending balance (June 30, 2022)  $514   $619   $2,340   $71   $67   $632   $4,243 
                                    
Six Months Ended June 30, 2023:                                   
                                    
Beginning balance Dec 31, 2022  $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 31, 2023  $801   $1,075   $2,895   $451   $15   $774   $6,011 
Credit loss expense (income)   82    (38)   (93)   229    75    1,056    1,311 
Charge-offs   —    —    —    —    (42)   (804)   (846)
Recoveries   —    —    —    —    87    82    169 
                                    
Ending balance (June 30, 2023)  $883   $1,037   $2,802   $680   $135   $1,108   $6,645 
                                    
Six Months Ended June 30, 2022:                                   
                                    
Beginning balance  $482   $535   $1,535   $32   $74   $417   $3,075 
Provision for loan losses   32    84    805    39    27    396    1,383 
Charge-offs   —    —    —    —    (90)   (209)   (299)
Recoveries   —    —    —    —    56    28    84 
                                    
Ending balance  $514   $619   $2,340   $71   $67   $632   $4,243 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

                             
   Residential   Multi-Family   Commercial                 
   Real
Estate		   Real
Estate		  

Real
Estate

   Land and Construction   Commercial   Consumer   Total 
                             
At December 31, 2022:                                   
Individually evaluated for impairment:                                   
Recorded investment  $—   $—   $—   $—   $—   $—   $— 
Balance in allowance for loan losses  $—   $—   $—   $—   $—   $—   $— 
                                    
Collectively evaluated for impairment:                                   
Recorded investment  $50,354   $69,555   $310,695   $17,286   $5,165   $30,323   $483,378 
Balance in allowance for loan losses  $768   $748   $3,262   $173   $277   $565   $5,793 

 

(continued) 
Schedule of Loans by Credit Quality

                              
   Pass   OLEM

(Other Loans Especially

Mentioned)

  

Sub-

Standard

   Doubtful   Loss   Total 
At December 31, 2022:                              
Residential real estate  $50,354   $—   $—   $—   $—   $50,354 
Multi-family real estate   69,555    —    —    —    —    69,555 
Commercial real estate   309,458    —    1,237    —    —    310,695 
Land and construction   17,286    —    —    —    —    17,286 
Commercial   5,165    —    —    —    —    5,165 
Consumer   30,323    —    —    —    —    30,323 
                               
Total  $482,141   $—   $1,237   $—   $—   $483,378 
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 June 30, 2023:                                   
Residential real estate  $—   $—   $—   $—   $60,273   $      —   $60,273 
Multi-family real estate   1,259    —    —    1,259    68,259    —    69,518 
Commercial real estate   —    —    —    —    321,814    —    321,814 
Land and construction   —    —    —    —    27,019    —    27,019 
Commercial   —    —    —    —    6,950    —    6,950 
Consumer   347    158    —    505    40,181    —    40,686 
                                    
Total  $1,606   $158   $—   $1,764   $524,496   $—   $   526,260 

 

   Accruing Loans         
 

30-59 Days

Past

Due

  

60-89

Days

Past

Due

  

Greater

Than 90 Days

Past

Due

  

Total

Past

Due

   Current  

Nonaccrual

Loans

  

Total

Loans

 
At December 31, 2022:                                   
Residential real estate  $—   $—   $—   $—   $50,354   $     —   $50,354 
Multi-family real estate   —    —    —    —    69,555    —    69,555 
Commercial real estate   —    —    —    —    310,695    —    310,695 
Land and construction   —    —    —    —    17,286    —    17,286 
Commercial   —    —    —    —    5,165    —    5,165 
Consumer   150    27    —    177    30,146    —    30,323 
                                    
Total  $150   $27   $—   $177   $483,201   $—   $  483,378 
Schedule of Amortized Cost Basis

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
land and construction 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass  $       6,406   $15,136   $2,324   $1,509   $1,644   $-   $      -   $         -   $27,019 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $6,406   $15,136   $2,324   $1,509   $1,644   $-   $-   $-   $27,019 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 
Residential real estate                                             
Pass  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
OLEM (Other Loans Especially Mentioned)   -    -    -    -    -    -    -    -    - 
Substandard   -    -    -    -    -    -    -    -    - 
Doubtful   -    -    -    -    -    -    -    -    - 
Loss   -    -    -    -    -    -    -    -    - 
Subtotal loans  $7,350   $26,567   $9,853   $6,686   $4,097   $3,286   $2,434   $-   $60,273 
Current period Gross charge-offs  $-   $-   $-   $-   $-   $-   $-   $-   $- 

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

Term Loans

Amortized Cost Basis by Origination Year

 

   Term Loans
Amortized Cost Basis by Origination Year		  

Revolving Loans

(Amortized

   Revolving Loans Converted to Term Loans (Amortized     
Multi-family real estate 

June 30, 2023

  

2022

  

2021

  

2020

  

2019

  

Prior

  

Cost Basis)

  

Cost

Basis)

  

Total

 
Pass   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $               -     $ 69,518  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 998     $ 29,396     $ 29,570     $ 6,185     $ 2,090     $ 1,279     $ -     $ -     $ 69,518  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial real estate (CRE)                                                                        
Pass   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 12,815     $ 16,218     $ -     $ -     $ 320,592  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       1,222       -       -       -       1,222  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 20,590     $ 199,769     $ 55,017     $ 16,183     $ 14,037     $ 16,218     $ -     $ -     $ 321,814  
Current period Gross charge-offs   $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -     $ -  
Commercial                                                                        
Pass   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 4,044     $ 1,401     $ 1,363     $ 85     $ 57     $ -     $ -     $ -     $ 6,950  
Current period Gross charge-offs   $ (16 )    $ -     $ -     $ -     $ -     $ (26 )   $ -     $ -     $ (42 )
Consumer                                                                        
Pass   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
OLEM (Other Loans Especially Mentioned)     -       -       -       -       -       -       -       -       -  
Substandard     -       -       -       -       -       -       -       -       -  
Doubtful     -       -       -       -       -       -       -       -       -  
Loss     -       -       -       -       -       -       -       -       -  
Subtotal loans   $ 8,798     $ 9,359     $ 5,612     $ 250     $ 198     $ -     $ 16,469     $ -     $ 40,686  
Current period Gross charge-offs   $ (30 )   $ (505 )   $ (266 )   $ (3 )   $ -     $ -     $ -     $ -     $ (804 )
v3.23.2
Earnings Per Share (Tables)
 6 Months Ended
Jun. 30, 2023
Earnings Per Share [Abstract]  
Schedule of Basic and Diluted Loss Per Share

   2023   2022   2023   2022 
   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2023   2022   2023   2022 
Weighted-average number of common shares outstanding used to calculate basic and diluted earnings per common share  $7,250,219   $6,007,484   $7,226,953   $5,455,406 
v3.23.2
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2023
Fair Value Disclosures [Abstract]  
Schedule of Debt Securities Available-for-sale Measured at Fair Value on Recurring Basis

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

 

                
       Fair Value Measurements Using 
   Fair Value  

Quoted Prices

In Active Markets for

Identical Assets

(Level 1)

  

Significant

Other Observable

Inputs

(Level 2)

  

 

Significant

Unobservable

Inputs

(Level 3)

 
At June 30, 2023:                    
SBA Pool Securities  $759   $  —   $759    — 
Collateralized mortgage obligations   124    —    124    — 
Taxable municipal securities   12,011    —    12,011    — 
Mortgage-backed securities   11,868    —    11,868    — 
Total  $24,762    —   $24,762    — 
                     
At December 31, 2022:                    
SBA Pool Securities  $817   $—   $817    — 
Collateralized mortgage obligations   130    —    130    — 
Taxable municipal securities   11,620    —    11,620    — 
Mortgage-backed securities   12,535    —    12,535    — 
Total  $25,102    —   $25,102    — 
v3.23.2
Fair Value of Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2023
Investments, All Other Investments [Abstract]  
Schedule of Estimated Fair Value of Financial Instruments

 

   At June 30, 2023   At December 31, 2022 
   Carrying Amount   Fair Value   Level   Carrying Amount   Fair Value   Level 
                         
Financial assets:                              
Cash and cash equivalents  $78,373   $78,373    1   $71,836   $71,836    1 
Debt securities available for sale   24,762    24,762    2    25,102    25,102    2 
Debt securities held-to-maturity   445    406    2    540    504    2 
Loans   518,829    512,031    3    477,218    476,566    3 
Federal Home Loan Bank stock   717    717    3    600    600    3 
Accrued interest receivable   1,559    1,559    3    1,444    1,444    3 
                               
Financial liabilities:                              
Deposit liabilities   551,631    556,017    3    507,899    512,357    3 
Federal Home Loan Bank advances   10,000    9,456    3    10,000    9,450    3 
Off-balance sheet financial instruments   —    —    3    —    —    3 
v3.23.2
Off- Balance Sheet Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2023
Off- Balance Sheet Financial Instruments  
Schedule of Off-Balance Sheet Risks of Financial Instruments

 

     
Commitments to extend credit  $32,184 
      
Unused lines of credit  $56,272 
      
Standby letters of credit  $4,313 
v3.23.2
Regulatory Matters (Tables)
 6 Months Ended
Jun. 30, 2023
Schedule of Capital Amounts, Ratios and Regulatory Thresholds

 

   Actual   To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework) 
   Amount   %   Amount   % 
As of June 30, 2023:                
Tier 1 Capital to Total Assets   69,234    11.20%   55,616    9.00%
                     
As of December 31, 2022:                    
Tier 1 Capital to Total Assets   66,291    11.29%   52,865    9.00%
v3.23.2
Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Accounting Policies [Abstract]    
Unrealized loss on debt securities available for sale $ (7,452) $ (7,786)
Unamortized portion of unrealized loss related to debt securities available for sale transferred to securities held-to-maturity (16) (18)
Income tax benefit 1,893 1,978
Accumulated other comprehensive loss $ (5,575) $ (5,826)
v3.23.2
General (Details Narrative) - USD ($)
Jun. 30, 2023
Dec. 31, 2022
Retained earnings $ (19,789,000) $ (22,073,000)
Accrued interest receivable for debt securities available for sale 169,000  
Accrued interest receivable 1,559,000 1,444,000
Liability for credit losses on unfunded commitments
Unfunded Loan Commitment [Member]    
Liability for credit losses on unfunded commitments 236,000  
Loan [Member]    
Accrued interest receivable 1,377,000  
Accounting Standards Update 2016-13 [Member]    
Allowance for credit losses 219,000  
Liability for unfunded commitments 23,000  
Deferred income tax assets, net 61,000  
Retained earnings $ 181,000  
Optimum Bank [Member]    
Equity method investment, ownership percentage 100.00%  
v3.23.2
Schedule of Amortized Cost and Approximate Fair Values of Debt Securities (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, amortized cost $ 32,213 $ 32,888
Available for sale, gross unrealized gains 1 1
Available for sale, gross unrealized losses (7,452) (7,787)
Available for sale, fair value 24,762 25,102
Held-to-maturity, amortized cost 445 540
Held-to-maturity, gross unrealized gains
Held-to-maturity, gross unrealized losses (39) (36)
Held-to-maturity, fair value 406 504
Taxable Municipal Bonds [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, gross unrealized gains
Taxable Municipal Bonds [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, amortized cost 16,710 16,729
Available for sale, gross unrealized losses (4,699) (5,109)
Available for sale, fair value 12,011 11,620
SBA Pool Securities [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, amortized cost 775 834
Available for sale, gross unrealized gains 1 1
Available for sale, gross unrealized losses (17) (18)
Available for sale, fair value 759 817
Collateralized Mortgage Obligations [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, amortized cost 139 145
Available for sale, gross unrealized gains
Available for sale, gross unrealized losses (15) (15)
Available for sale, fair value 124 130
Held-to-maturity, amortized cost 415 475
Held-to-maturity, gross unrealized gains
Held-to-maturity, gross unrealized losses (39) (35)
Held-to-maturity, fair value 376 440
Collateralized Mortgage-Backed Securities [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for sale, amortized cost 14,589 15,180
Available for sale, gross unrealized gains
Available for sale, gross unrealized losses (2,721) (2,645)
Available for sale, fair value 11,868 12,535
Held-to-maturity, amortized cost 30 65
Held-to-maturity, gross unrealized gains
Held-to-maturity, gross unrealized losses (1)
Held-to-maturity, fair value $ 30 $ 64
v3.23.2
Schedule of Debt Securities Available for Sale with Gross Unrealized Losses, by Investment Category (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Impairment Effects on Earnings Per Share [Line Items]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses $ 7,452 $ 7,748
Available for Sale, Securities Position Over 12 Months, Fair Value 24,611 24,569
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses 39
Available for Sale, Securities Position Less than 12 Month, Fair Value 373
Taxable Municipal Bonds [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses 4,699 5,109
Available for Sale, Securities Position Over 12 Months, Fair Value 12,012 11,620
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses
Available for Sale, Securities Position Less than 12 Month, Fair Value
SBA Pool Securities [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses 17 18
Available for Sale, Securities Position Over 12 Months, Fair Value 607 657
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses
Available for Sale, Securities Position Less than 12 Month, Fair Value
Collateralized Mortgage Obligations [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses 15
Available for Sale, Securities Position Over 12 Months, Fair Value 124
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses 15
Available for Sale, Securities Position Less than 12 Month, Fair Value 130
Collateralized Mortgage-Backed Securities [Member]    
Impairment Effects on Earnings Per Share [Line Items]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses 2,721 2,621
Available for Sale, Securities Position Over 12 Months, Fair Value 11,868 12,292
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses 24
Available for Sale, Securities Position Less than 12 Month, Fair Value $ 243
v3.23.2
Debt Securities (Details Narrative) - USD ($)
 6 Months Ended 12 Months Ended
Jun. 30, 2023
Dec. 31, 2022
Jun. 30, 2022
Debt Securities      
Available for sale debt securities $ 0   $ 0
Debt securities in unrealized loss forty-two forty  
v3.23.2
Schedule of Components of Loans (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Mar. 31, 2023
Dec. 31, 2022
Jun. 30, 2022
Mar. 31, 2022
Dec. 31, 2021
Financing Receivable, Past Due [Line Items]            
Total loans $ 526,260   $ 483,378      
Net deferred loan fees, and costs (786)   (367)      
Allowance for credit losses (6,645) $ (6,353) (5,793) $ (4,243) $ (3,408) $ (3,075)
Loans, net 518,829   477,218      
Residential Portfolio Segment [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 60,273   50,354      
Allowance for credit losses (883) (742) (768) (514) (575) (482)
Multi Family Real Estate [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 69,518   69,555      
Allowance for credit losses (1,037) (1,077) (748) (619) (549) (535)
Commercial Real Estate Portfolio Segment [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 321,814   310,695      
Allowance for credit losses (2,802) (3,030) (3,262) (2,340) (1,607) (1,535)
Construction Loans [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 27,019   17,286      
Allowance for credit losses (680) (533) (173) (71) (79) (32)
Commercial Portfolio Segment [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 6,950   5,165      
Allowance for credit losses (135) (26) (277) (67) (68) (74)
Consumer Portfolio Segment [Member]            
Financing Receivable, Past Due [Line Items]            
Total loans 40,686   30,323      
Allowance for credit losses $ (1,108) $ (945) $ (565) $ (632) $ (530) $ (417)
v3.23.2
Schedule of Changes in Allowance for Loan Losses (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Dec. 31, 2022
Financing Receivable, Past Due [Line Items]          
Beginning balance $ 6,353 $ 3,408 $ 5,793 $ 3,075  
Credit loss expense (income) 545   1,311    
Charge-offs (383) (226) (846) (299)  
Recoveries 130 70 169 84  
Ending balance 6,645 4,243 6,645 4,243  
Provision for loan losses   991   1,383  
Additional allowance recognized due to adoption of Topic 326     218    
Balance January 31, 2023     6,011    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         483,378
Balance in allowance for loan losses         5,793
Residential Portfolio Segment [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 742 575 768 482  
Credit loss expense (income) 141   82    
Charge-offs  
Recoveries  
Ending balance 883 514 883 514  
Provision for loan losses   (61)   32  
Additional allowance recognized due to adoption of Topic 326     33    
Balance January 31, 2023     801    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         50,354
Balance in allowance for loan losses         768
Multi Family Real Estate [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 1,077 549 748 535  
Credit loss expense (income) (40)   (38)    
Charge-offs  
Recoveries  
Ending balance 1,037 619 1,037 619  
Provision for loan losses   70   84  
Additional allowance recognized due to adoption of Topic 326     327    
Balance January 31, 2023     1,075    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         69,555
Balance in allowance for loan losses         748
Commercial Real Estate Portfolio Segment [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 3,030 1,607 3,262 1,535  
Credit loss expense (income) (228)   (93)    
Charge-offs  
Recoveries  
Ending balance 2,802 2,340 2,802 2,340  
Provision for loan losses   733   805  
Additional allowance recognized due to adoption of Topic 326     (367)    
Balance January 31, 2023     2,895    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         310,695
Balance in allowance for loan losses         3,262
Construction Loans [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 533 79 173 32  
Credit loss expense (income) 147   229    
Charge-offs  
Recoveries  
Ending balance 680 71 680 71  
Provision for loan losses   (8)   39  
Additional allowance recognized due to adoption of Topic 326     278    
Balance January 31, 2023     451    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         17,286
Balance in allowance for loan losses         173
Commercial Portfolio Segment [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 26 68 277 74  
Credit loss expense (income) 38   75    
Charge-offs (16) (90) (42) (90)  
Recoveries 87 56 87 56  
Ending balance 135 67 135 67  
Provision for loan losses   33   27  
Additional allowance recognized due to adoption of Topic 326     (262)    
Balance January 31, 2023     15    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         5,165
Balance in allowance for loan losses         277
Consumer Portfolio Segment [Member]          
Financing Receivable, Past Due [Line Items]          
Beginning balance 945 530 565 417  
Credit loss expense (income) 487   1,056    
Charge-offs (367) (136) (804) (209)  
Recoveries 43 14 82 28  
Ending balance $ 1,108 632 1,108 632  
Provision for loan losses   $ 224   $ 396  
Additional allowance recognized due to adoption of Topic 326     209    
Balance January 31, 2023     $ 774    
Recorded investment        
Balance in allowance for loan losses        
Recorded investment         30,323
Balance in allowance for loan losses         $ 565
v3.23.2
Schedule of Loans by Credit Quality (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross $ 526,260 $ 483,378
Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross   482,141
Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross  
Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross   1,237
Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross  
Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross  
Residential Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 60,273 50,354
Residential Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 60,273 50,354
Residential Portfolio Segment [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Residential Portfolio Segment [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Multi Family Real Estate [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 69,518 69,555
Multi Family Real Estate [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 69,518 69,555
Multi Family Real Estate [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Multi Family Real Estate [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Multi Family Real Estate [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Multi Family Real Estate [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 321,814 310,695
Commercial Real Estate Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 320,592 309,458
Commercial Real Estate Portfolio Segment [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Real Estate Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 1,222 1,237
Commercial Real Estate Portfolio Segment [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Real Estate Portfolio Segment [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Construction Loans [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 27,019 17,286
Construction Loans [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 27,019 17,286
Construction Loans [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Construction Loans [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Construction Loans [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Construction Loans [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 6,950 5,165
Commercial Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 6,950 5,165
Commercial Portfolio Segment [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Commercial Portfolio Segment [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 40,686 30,323
Consumer Portfolio Segment [Member] | Pass [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross 40,686 30,323
Consumer Portfolio Segment [Member] | Special Mention [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Substandard [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Doubtful [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
Consumer Portfolio Segment [Member] | Loss [Member]    
Financing Receivable, Past Due [Line Items]    
Loans and Leases Receivable, Gross
v3.23.2
Schedule of Age Analysis of Past-due Loans (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 526,260 483,378
Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 1,606 150
Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 158 27
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 1,764 177
Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 524,496 483,201
Residential Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 60,273 50,354
Residential Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Residential Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Residential Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Residential Portfolio Segment [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Residential Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 60,273 50,354
Multi Family Real Estate [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 69,518 69,555
Multi Family Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 1,259
Multi Family Real Estate [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Multi Family Real Estate [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Multi Family Real Estate [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 1,259
Multi Family Real Estate [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 68,259 69,555
Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 321,814 310,695
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Real Estate Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 321,814 310,695
Construction Loans [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 27,019 17,286
Construction Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Construction Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Construction Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Construction Loans [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Construction Loans [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 27,019 17,286
Commercial Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 6,950 5,165
Commercial Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Portfolio Segment [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Commercial Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 6,950 5,165
Consumer Portfolio Segment [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, Nonaccrual
Loans and Leases Receivable, Gross 40,686 30,323
Consumer Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 347 150
Consumer Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 158 27
Consumer Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss
Consumer Portfolio Segment [Member] | Financial Asset, Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss 505 177
Consumer Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]    
Financing Receivable, Past Due [Line Items]    
Financing Receivable, before Allowance for Credit Loss $ 40,181 $ 30,146
v3.23.2
Schedule of Amortized Cost Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans $ 526,260 $ 483,378
Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 6,406  
2022 15,136  
2021 2,324  
2020 1,509  
2019 1,644  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 27,019 17,286
Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 20,590  
2022 199,769  
2021 55,017  
2020 16,183  
2019 14,037  
Prior 16,218  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 321,814 310,695
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Current period Gross write-offs  
Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 7,350  
2022 26,567  
2021 9,853  
2020 6,686  
2019 4,097  
Prior 3,286  
Revolving Loans (Amortized Cost Basis) 2,434  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 60,273 50,354
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Current period Gross write-offs  
Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 998  
2022 29,396  
2021 29,570  
2020 6,185  
2019 2,090  
Prior 1,279  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 69,518 69,555
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Current period Gross write-offs  
Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 4,044  
2022 1,401  
2021 1,363  
2020 85  
2019 57  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 6,950 5,165
2023 (16)  
2022  
2021  
2020  
2019  
Prior (26)  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Current period Gross write-offs (42)  
Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 8,798  
2022 9,359  
2021 5,612  
2020 250  
2019 198  
Prior  
Revolving Loans (Amortized Cost Basis) 16,469  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 40,686 30,323
2023 (30)  
2022 (505)  
2021 (266)  
2020 (3)  
2019  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Current period Gross write-offs (804)  
Pass [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans   482,141
Pass [Member] | Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 6,406  
2022 15,136  
2021 2,324  
2020 1,509  
2019 1,644  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 27,019 17,286
Pass [Member] | Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 20,590  
2022 199,769  
2021 55,017  
2020 16,183  
2019 12,815  
Prior 16,218  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 320,592 309,458
Pass [Member] | Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 7,350  
2022 26,567  
2021 9,853  
2020 6,686  
2019 4,097  
Prior 3,286  
Revolving Loans (Amortized Cost Basis) 2,434  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 60,273 50,354
Pass [Member] | Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 998  
2022 29,396  
2021 29,570  
2020 6,185  
2019 2,090  
Prior 1,279  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 69,518 69,555
Pass [Member] | Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 4,044  
2022 1,401  
2021 1,363  
2020 85  
2019 57  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 6,950 5,165
Pass [Member] | Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023 8,798  
2022 9,359  
2021 5,612  
2020 250  
2019 198  
Prior  
Revolving Loans (Amortized Cost Basis) 16,469  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 40,686 30,323
Special Mention [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans  
Special Mention [Member] | Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Special Mention [Member] | Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Special Mention [Member] | Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Special Mention [Member] | Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Special Mention [Member] | Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Special Mention [Member] | Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Substandard [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans   1,237
Substandard [Member] | Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Substandard [Member] | Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019 1,222  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans 1,222 1,237
Substandard [Member] | Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Substandard [Member] | Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Substandard [Member] | Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Substandard [Member] | Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans  
Doubtful [Member] | Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member] | Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member] | Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member] | Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member] | Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Doubtful [Member] | Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
Subtotal loans  
Loss [Member] | Construction Loans [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member] | Commercial Real Estate Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member] | Residential Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member] | Multi Family Real Estate [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member] | Commercial Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
Loss [Member] | Consumer Portfolio Segment [Member]    
Financing Receivable, Credit Quality Indicator [Line Items]    
2023  
2022  
2021  
2020  
2019  
Prior  
Revolving Loans (Amortized Cost Basis)  
Revolving Loans Converted to Term Loans (Amortized Cost Basis)  
Subtotal loans
v3.23.2
Schedule of Basic and Diluted Loss Per Share (Details) - shares
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Earnings Per Share [Abstract]        
Weighted-average number of common shares outstanding used to calculate basic and diluted earnings per common share 7,250,219 6,007,484 7,226,953 5,455,406
v3.23.2
Stock-Based Compensation (Details Narrative)
 6 Months Ended
Jun. 30, 2023
USD ($)
shares
Director [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Shares, issued for services 66,479
Stock based compensation | $ $ 274,000
Employees [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Shares, issued for services 52,622
Stock based compensation | $ $ 216,000
2018 Equity Incentive Plan [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Stock options, issued 1,050,000
Stock options available for grant 539,320
2018 Equity Incentive Plan [Member] | Minimum [Member]  
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items]  
Stock options, issued 500,000
v3.23.2
Schedule of Debt Securities Available-for-sale Measured at Fair Value on Recurring Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale $ 24,762 $ 25,102
Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 24,762 25,102
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 24,762 25,102
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
SBA Pool Securities [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 759 817
SBA Pool Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
SBA Pool Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 759 817
SBA Pool Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Collateralized Mortgage Obligations [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 124 130
Collateralized Mortgage Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Collateralized Mortgage Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 124 130
Collateralized Mortgage Obligations [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Taxable Municipal Securities [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 12,011 11,620
Taxable Municipal Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Taxable Municipal Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 12,011 11,620
Taxable Municipal Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Collateralized Mortgage-Backed Securities [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 11,868 12,535
Collateralized Mortgage-Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 1 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
Collateralized Mortgage-Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale 11,868 12,535
Collateralized Mortgage-Backed Securities [Member] | Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Debt Securities, Available-for-Sale
v3.23.2
Schedule of Estimated Fair Value of Financial Instruments (Details) - USD ($)
$ in Thousands
Jun. 30, 2023
Dec. 31, 2022
Platform Operator, Crypto-Asset [Line Items]    
Cash and cash equivalents $ 78,373 $ 71,836
Debt securities available for sale 24,762 25,102
Debt securities held-to-maturity 445 540
Loans 518,829 477,218
Federal home loan bank stock 717 600
Accrued interest receivable 1,559 1,444
Deposit liabilities 551,631 507,899
Federal home loan bank advances 10,000 10,000
Off-balance sheet financial instruments
Fair Value, Inputs, Level 1 [Member]    
Platform Operator, Crypto-Asset [Line Items]    
Cash and cash equivalents 78,373 71,836
Fair Value, Inputs, Level 2 [Member]    
Platform Operator, Crypto-Asset [Line Items]    
Debt securities available for sale 24,762 25,102
Debt securities held-to-maturity 406 504
Fair Value, Inputs, Level 3 [Member]    
Platform Operator, Crypto-Asset [Line Items]    
Loans 512,031 476,566
Federal home loan bank stock 717 600
Accrued interest receivable 1,559 1,444
Deposit liabilities 556,017 512,357
Federal home loan bank advances 9,456 9,450
Off-balance sheet financial instruments
v3.23.2
Schedule of Off-Balance Sheet Risks of Financial Instruments (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Off- Balance Sheet Financial Instruments  
Commitments to extend credit $ 32,184
Unused lines of credit 56,272
Standby letters of credit $ 4,313
v3.23.2
Schedule of Capital Amounts, Ratios and Regulatory Thresholds (Details)
$ in Thousands
Jun. 30, 2023
USD ($)
Dec. 31, 2022
USD ($)
Tier I Capital to Total Assets, Amount $ 69,234 $ 66,291
Tier I Capital to Total Assets, Ratio 0.1120 0.1129
Tier I Capital to Total Assets To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework), Amount $ 55,616 $ 52,865
Tier I Capital to Total Assets To Be Well Capitalized Under Prompt Corrective Action Regulations (CBLR Framework), Ratio 0.0900 0.0900
v3.23.2
Series B Preferred Stock (Details Narrative) - $ / shares
 6 Months Ended
Jun. 30, 2023
Jun. 27, 2023
Dec. 31, 2022
Series B Preferred Stock [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Preferred Stock, Liquidation Preference Per Share $ 25,000    
Preferred stock shares issued 1,360   1,360
Preferred stock conversion   11,113,889  
Series B1 Preferred Stock [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Preferred stock shares issued 760    
Preferred stock conversion price $ 2.50    
Series B2 Preferred Stock [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Preferred stock shares issued 260    
Preferred stock conversion price $ 4.00    
Series B3 Preferred Stock [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Preferred stock shares issued 500    
Preferred stock conversion price $ 4.50    
Common Stock [Member] | Series B Preferred Stock [Member]      
Accumulated Other Comprehensive Income (Loss) [Line Items]      
Conversion of Stock, Shares Issued 11,113,889    
v3.23.2
Contingencies (Details Narrative) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2023
Jun. 30, 2022
Jun. 30, 2023
Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]        
Litigation settlement expense $ 375 $ 375

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