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Chairman Comments from the Annual Shareholder Meeting held on April 26, 2022

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Optimum Bank Holdings, Inc.
Optimum Bank Holdings, Inc.

Fort Lauderdale, FL, April 26, 2022 (GLOBE NEWSWIRE) -- OptimumBank Holdings, Inc. (OPHC-NASDAQ). Similar to my comments at last year’s Annual Shareholder meeting, I want to focus today on our past year’s results and discuss what we expect 2022 will look like. We cannot really understand last year without understanding how we arrived at 2021. Our story really is all about growth. For years the Company was limited on what we were allowed to do because of circumstances that preceded any of our current management or board members. I have been fortunate to have an excellent team with me on the board of directors and I take the responsibility seriously as their chairman.

Last year we had one board member retire and we were fortunate to gain my business partner Michael Blisko as a board member. From the start, Michael added a new level of insight to the marketing side of our bank. Michael has also brought a new point of view to the board when discussing different ideas. Together, Michael and I have added capital to support growth of the Company, and we have been able to bring in larger investors that have invested but more importantly have become part of the family and are helping the bank grow with deposits, loans and further capital. Our one goal is to provide shareholder returns and we are poised to continue into 2022 the way we ended 2021. One of the changes we have made over the last few years has been to make the bank a more user friendly bank. What I mean by user friendly is that we want to distinguish ourselves in how we treat our customers. We treat all customers like they are wealth management clients regardless of the amount of business they do with us or how many dollars they keep on account with us. I personally refer to our customers as family members. We want to serve each of our customers’ banking needs. For example, I do not want to just lend a customer money, I also want to give them a home equity loan and have their checking account. I want them to call us when they need anything banking related. More importantly, I want us to come through for our customers’ total needs. To do that, we keep moving forward. In 2021, we upgraded most of our online services and have seen our customers’ increased usage. By way of example, in 2021, the bank’s fee income grew 389%, from $272,000 in 2020 to $1,331,000 in 2021. We expect fee income to be over $2.6MM in 2022, thereby doubling the fee income from 2021.

We will continue to improve our online banking, as we believe the future lies in the online platform and to a lesser extent in the bricks and mortar locations. In 2022, we expect our customers will be able to open accounts completely online. We also expect our website users to be able to select various language option to better attract foreigners doing business in America. Most recently, we have been opening accounts for foreign nationals that own real estate in Florida. As mentioned earlier, while we believe the branch network is becoming less important than our online presence, nevertheless, we felt it necessary to restructure our branch network to solidify our core customers. To that end, in 2021 we sold our original Plantation branch resulting in a $340,000 gain and have signed a lease for a new location in North Miami Beach. We have been part of that community for the last ten years and we feel that putting a branch amongst many of our current customers solidifies those relationships. I am personally very proud to have been part of assisting Bais Menachem, a local synagogue, and currently banking that community. We look forward to continuing to do so with pleasure for years to come.

Another change we made in 2021 was offering a new lending product. We felt as a board, with Michael and I being on the board and being heavily involved in the healthcare space, that we start a lending platform for healthcare providers needing financing for government receivables. We hired an experienced fulltime lender specifically for this product and we have already closed our first loan and expect the size of that segment of the business to increase to $30MM by the end of 2022. We are expecting the interest income to be right around $1MM in 2022 for that segment.

Last year, I said that I appreciated the confidence you have in me to lead our Board and help OptimumBank Holdings, Inc. reach profitability and work towards reaching our singular goal of bringing shareholder returns, while safeguarding the Company’s equity. 2021 was the year that we finally reached a core profitability not adding back provision. The consolidated net income after provision, but before income tax benefit was $3,069,000. In comparison, that number in 2020 was a negative $782,000. The provision for loan loss in 2021 was $1,173,000 as compared to $1,020,000 in 2020. So far in 2022, our first quarter pre-tax income is over $1,000,000 after a loan loss provision of $392,000.

The Bank continues to work with the Small Business Administration (“SBA”) and its borrowers to attain forgiveness for loans made with the Paycheck Protection Plan (“PPP”). The Bank closed a total of 502 PPP loans totaling $37.4MM. From that total, $29MM has already been forgiven. OptimumBank had facilitated these loans to assist the local community, obtain new customers, strengthen ties, and has actively engaged in cross-selling other Bank products.

Our total loans have grown from $152MM at the end of 2020 to $247MM at the end of 2021. That is a 63% growth rate and I am sure that we are doing better than our fellow banks in Florida. As of 3/31/2022 our loan portfolio is now at $273MM, which is a growth rate of more than 10% in one quarter. Our secret sauce lies in the fact that our customers all have long time relationships with people at the bank, the bank itself or board members. We are currently closing loans for borrowers that were referred by borrowers who were referred by borrowers before them. We currently spend little in annual marketing fees as its not needed. Specifically, in 2020, we spent approximately $15K and less than $13k in 2021 in marketing fees. We expect that as our lending limits increase, we will be able to keep lending to our base and future referrals. In the last five years we have had no bad debt, in fact we have recovered $365k from loans we had previously written off. With the exception of a few unsecured consumer loans, we currently do not have any other loans past due.

In 2021, net interest income increased by $4,414,000 or 88% over 2020. In totality, net interest income in 2021 was $9,404,000, and we are anticipating that number to be over $16MM in 2022. At December 31, 2021, total assets amounted to approximately $351MM, as compared to $235MM for the prior year, which represents a growth of $116MM or 50%. At March 31, 2022 we reached $387MM and expect to surpass $500MM before the end of the year. The increase in total assets was mainly driven by a growth of $95MM in loans and $4MM in cash, cash equivalents and investments. For the period ended March 31, 2022, we continued growing our loan portfolio by $30MM. In order to fund the growth experienced by the Bank, it undertook a significant program of increasing non-maturity deposits such as checking accounts and money market accounts. From the end of the year 2020 until the end of the year 2021 we grew by 53% or $101.7MM, which put us at $292MM. At March 31, 2022, deposits have grown to over $317MM.

In 2021 our equity rose to $38.5MM from $17.8MM at year end 2020. We did this by selling a $14.4MM mixture of common and preferred stock, while the rest came from net income. In first quarter 2022 we sold an additional 11MM of stock. At this point, capital is not an obstacle to the Company’s growth. As has been noted in the past, the Company and the Bank are fortunate to enjoy a broad-based Boards of Directors with access to capital.

Based on 4,775,281 shares outstanding at 12/31/2021, we had an Earnings Per Share (EPS) of $1.32., and if we assume the preferred stock was converted to common at 12/31/2021, the EPS would be 51 cents. As of 3/31/22 with common shares outstanding of 6,002,612 we have an EPS of 14 cents and if we assume the preferred stock was converted it would be 6 cents. I would note that the equity came in at the end of the quarter and these results don’t reflect the money being put out to use as of yet. We expect ending the year with an EPS of 41 cents assuming all preferred stock is converted to common. 41 cents would put our value at close to 5.75 a share compared to the P/E ratios at which other banks trade.

I will conclude my comments with the following. I began my comments with the statement that we are all about growth. A few years ago, we created a Strategic Plan which provided the roadmap for increased growth. Once we graduated from the enhanced regulatory scrutiny which exhausted management’s time and efforts in 2019, we were able to raise additional capital and went after the tasks we needed to do to succeed. As stated earlier, we have grown our assets, deposits, loan portfolio as well as our net interest income, fee service income, which brings us to the last piece, net income growth. As we succeed, we will keep pushing the goals further out so that we can improve our results and truly succeed in bringing returns to all of our shareholders.

We will continue working hard and expect great things to happen in the future.

Thank you,

Moishe Gubin, Chairman

Investor Relations:
OptimumBank Holdings. Inc.