OptimumBank Holdings Q3 2025 Earnings Call - Record Quarterly Profit Driven by Strong Loan and Deposit Growth Amid Community Banking Discipline

Conference Operator: Ladies and gentlemen, thank you for joining us, and welcome to OptimumBank Holdings Q3 Earnings Call. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please raise your hand. If you have dialed into today’s call, please press star 9 to raise your hand and star 6 to unmute. I will now hand the conference over to Seth Denison, Managing Director of Investor Relations. Please go ahead.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Good morning, everyone. My name is Seth Denison, the Managing Director of Investor Relations for OptimumBank Holdings, and we’re here for our third-quarter earnings call. To my left is Moshe Gubin, the Chairman of the Board. To Moshe’s left is Tim Terry, our President and CEO, and to Tim’s left is Elliot Menyes, who’s our CFO. This quarter carries special significance as November marks OptimumBank’s 25th anniversary. Since our founding in 2000, we’ve grown from a single branch in Plantation, Florida, into a $1.1 billion institution serving businesses and families across South Florida. It’s a proud milestone that reflects the dedication of our team and the trust of our clients and shareholders. Today’s call may include forward-looking statements based on management’s current expectations, assumptions, and beliefs about OptimumBank’s business and the environment in which it operates.

These statements are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated. The call is being recorded, and we refer you to our SEC filings, including our most recent Form 10Q, for additional information regarding risk factors and forward-looking statements. Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as identified in the presentation deck. Before we move into the results, I’d like to take a moment to introduce the leadership from our team. Here you can see Moshe Gubin as the Chairman of the Board, Tim Terry, our President and CEO, and Elliot Menyes, our Chief Financial Officer and Executive Vice President. This leadership team has built the culture, stability, and performance we’re discussing today.

I’m joined on the call by Moshe and Elliot, and Tim is also with us and will be available for Q&A following our prepared remarks. With that, I’ll turn it over to Moshe Gubin to begin the presentation.

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: All right, thank you, Seth, and good morning, everyone. This quarter carries special meaning as we celebrate 25 years of service to our communities. Since opening our doors in November 2000, OptimumBank has grown from a single branch in Plantation into a thriving financial institution with total assets approximately $1.1 billion as of September 30, 2025. As you see on this slide, it shows the timeline of that journey from our founding vision to where we stand today. Our growth has been built on conservative lending, strong capital management, and deep community relationships that reflect the core mission of a true community bank. Turning to slide five, our net earnings for the third quarter were strong, and I believe it’s our best quarter we’ve ever had, increasing by just over $700,000 to about $4.3 million compared with roughly $3.6 million in the second quarter.

This gain was driven by core banking strength and discipline execution. Net interest income rose by about $800,000 quarter over quarter, from a little over $10.2 million to just over $11 million, supported by a $733,000 increase in total interest income to approximately $16.3 million. While non-interest expenses increased modestly, up around $400,000 to about $6.6 million, revenue growth outpaced those costs. Non-interest income also improved sequentially, up nearly $150,000 to around $2 million. Profitability strengthened again this quarter, with net earnings before income taxes up just over $800,000 from the prior period, a testament to balanced revenue growth and cost control. On slide six, we highlight how these results translate into profitability. Pre-tax, pre-provision income reached approximately $17.35 million year to date, representing an annualized run rate of about $23.1 million.

Our core return on average equity, ROE, which adjusts for tax expense and provision for credit losses, was approximately 22.6% for the quarter, one of the highest levels among community banks nationwide. This performance demonstrates the resilience of our earnings engine and the effectiveness of our balance sheet strategy. On slide seven, slide seven captures the transformation of OptimumBank as a franchise and as a team. Our employee base has expanded to close to 100 people from about 73 people a year ago, which underscores the culture of momentum and the depth of talent driving our performance. On the balance sheet side, total assets, like I said earlier, have now surpassed $1.08 billion, close to $1.1 billion, representing a close to a 35% compounded annual growth rate since 2021. That is a number we are very proud of. That acceleration reflects not just scale, but discipline execution over multiple years.

From a profitability standpoint, our net interest margin of 4.24% year to date and core pre-tax, pre-provision earnings of $17.35 million, or $23.1 million annualized, show how the investments we have made in our people, our systems, and our lending platforms are translating into sustained performance. This slide also highlights the evolution of our physical footprint. From our beginning in Plantation in 2000 to Deerfield in Fort Lauderdale in 2004, and now to the opening of North Miami Beach in 2024, each step reflects an intentional expansion strategy. We have continuously aligned our branch presence with where our customers live, work, and do business, ensuring that our growth remains anchored in community connectivity and long-term franchise value.

Taken together, our growing team, our expanding asset base, our profitability trajectory, and our broadened geographic reach tell the story of a franchise that is stronger, more resilient, and more capable today than at any point in its history. It speaks to the discipline of our execution and the ambition of our vision as we move toward the next stage of our growth. With that, I’ll turn it over to Elliot to walk through the financial details behind this momentum and discuss how these results position us for the quarters ahead. Elliot?

Elliot Menyes, CFO and Executive Vice President, OptimumBank Holdings: Thank you, Moshe. Let us look at the drivers behind this quarter’s strong financial momentum, which you see detailed here on slide number eight. Moshe highlighted the strong growth in net earnings and net interest income. I now focus on the engine driving that performance and the nuances in our expense management. Our total interest income increase of $733,000 was primarily fueled by a significant jump of $682,000 in other interest income, reaching $2.09 million for the quarter, an important indicator of diversified yield generation. On the non-interest side, the total increase of $148,000 was driven by strong improvement in service charges and fees, up $153,000 to $1.25 million. Regarding funding costs, total interest expense declined modestly by $73,000, reflecting a $49,000 drop in deposit interest expense and the virtual elimination of borrowing costs for this quarter.

While total non-interest expenses increased by $423,000 to $6.6 million, this was mainly driven by planned investment in the franchise and in our personnel, with a rise of $266,000 in salaries and employee benefits costs, and a $163,000 increase in data processing, all supporting our operational scale. Higher revenue growth successfully outpaced this planned operating expenses, resulting in the $808,000 increase in net earnings before income taxes. This growth translated into sequential increases for our shareholders. First, basic net earnings per share increased by $0.06 to $0.37, undiluted net earnings per share increased by $0.03 to $0.18. Shifting to a year-over-year view for the first nine months on slide number nine, the numbers illustrate the scale of our ongoing transformation. Net earnings year to date totaled $11.8 million, a strong $2.6 million increase compared to the first nine months of 2024.

This success was driven by a $5.2 million increase in net interest income compared to the prior year period. We achieved impressive control over funding costs, with total interest expense decreasing by $2.3 million year over year, reflecting strategic management of our liability structure. Total non-interest income also showed excellent growth by increasing nearly $1.5 million. In short, the year-to-date results confirm that our strategies focused on managing funding costs and expanding high-quality loan growth are delivering significant improvements in core profitability and the bottom line. Next, as we move on to slide number 10, let’s review the growth and momentum across the key areas of loans and deposits. Gross loans ended the quarter at $813.7 million, up from $784.6 million last quarter. This increase of $29.1 million represents a strong acceleration of loan growth compared to last quarter, affirming our commitment to quality asset generation.

Our loan compounded annual growth rate remains robust at 36.8% since 2021. Our portfolio is well-diversified, and our yield on loans remains strong at 6.95%. On the deposit side, total deposits grew to $959.5 million, meaning we brought in $80.6 million in new deposits during the third quarter alone. This growth included an increase in low-cost, non-interest-bearing deposits, which represents 33% of the total mix, helping to keep our cost of interest-bearing deposits low at 3.51%. We also continue to see a strong drive in non-interest income, which on an annualized basis is $6.7 million, representing a 42.7% compounded annual growth rate since 2021. Importantly, the composition of this income stream continues to expand and diversify. Of the year-to-date total of $5.1 million, approximately $3.4 million came from service charges, $903,000 from SBA loan sales, and $755,000 from loan prepayment fees.

This mix reflects both the stability of our core fee businesses and the incremental contribution from strategic lending activities. Next, as we look at slide number 11, we highlight our consistently well-managed credit trends. Our allowance for credit losses to loans ratio stands at 1.23%, ensuring we are appropriately reserved and above the national peer average of 1.17%. Our non-performing assets to total assets ratio stands at just 0.33%, positioning us well below the national peer average of 0.56%. Most importantly, our year-to-date net charge-offs to average loan remains exceptionally low at 0.03%, underscoring the high quality and conservative underwriting that defines our loan book. Now turning to the balance sheet on slide number 12, we successfully crossed the $1 billion in total assets mark this quarter. Total assets grew by $83.9 million to $1.08 billion as of September 30, 2025.

This strong asset growth was well-funded as total deposits grew by $80.6 million to $959.5 million. We saw strong growth in non-interest-bearing demand deposits, which increased by $54.2 million and across time deposits, savings, NOW, and money market deposits. We saw a rise of over $26.5 million. On the funding side, we maintain an excellent balance sheet discipline, reflecting no Federal Home Loan borrowings during the quarter. Finally, reflecting on strong earnings retention and capital management, total stockholders’ equity increased by $5.5 million, sequentially to a grand total of $116.9 million. As we move forward and we take a look at slide number 13, we can wrap up with a summary of our compelling investment opportunity.

Our rapid organic growth continues to satisfy to significantly outpace peers, as demonstrated by our loan growth compounded annual growth rate of 36.8% and deposit growth compounded annual growth rate of 37.3% since 2021, both far exceeding national peers. Tangible book value per share rose to $4.97 at quarter-end on a fully diluted basis. The efficiency ratio remains highly competitive at 50.7%, well below the peer average of 68.02%. Our net interest margin of 4.24% year to date further highlights our strong earning capacity relative to peers. In short, this was another strong and disciplined quarter. We maintain solid capital, a well-managed balance sheet, and the flexibility to continue delivering on consistent long-term value. At this moment, Moshe, back to you.

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: Thanks, Elliot. As we conclude this presentation, I want to just add a few comments. One comment being that this was the first quarter where we cleaned up our capital stack, and now the earnings per share reads right with a diluted basis versus a non-diluted basis. That should make it a lot easier for investors to see the value in our stock as we’re trading at a very low multiple based on earnings. That being said, most important for today is to reiterate how proud we are that November is our 25th anniversary year, and we’re looking forward to making the next 25 years a lot better than these past 25 years. For a quarter century, OptimumBank hasn’t just been growing. We’ve been building a relationship-driven culture and a strategic operational model that truly punches above its weight.

Our focus remains clear, which is utilizing our strong capital and dedicated team to reinforce our position as one of the most dynamic and rapidly growing community banks in South Florida, all while staying true to the roots we established in the year 2000. With that, I’ll hand it back to Seth to open up Q&A.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Thank you, Moshe. Before we open it up for questions, I’d like to thank Moshe, Tim, and Elliot for their insights today. OptimumBank continues to deliver strong financial performance, and we appreciate those taking the time to learn more about us. With that, let’s open it up for questions.

Conference Operator: Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please raise your hand now. If you’ve dialed into today’s call, please press star nine to raise your hand and star six to unmute. Please stand by while we compile the Q&A. As a reminder, please raise your hand using the Zoom functionality. We have no questions in queue. I’ll turn it over to Seth for any written Q&A provided.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Fantastic. Thanks, John. We have here three questions that have been emailed in so far. I’m going to read those emailed questions. For anybody else who’s listening that might want to email any questions in, feel free to do so. Anybody who does not have my email address, you can reach me at [email protected]. That’s S-D-E-N-I-S-O-N at optimumbank.com. With that, I’m going to start with our first emailed question. Moshe, this one’s addressed to you. Q3 NIM increased to 4.37%, while year-to-date NIM stands at 4.24%. What drove that expansion in Q3, and how does year-to-date performance compare with margin levels going forward?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: That is a good question. Our model that we see is that as older loans are running off that are at a lower interest rate, newer loans are being put on the books and at a faster clip at a higher interest rate. That is really helping our NIM. Our model, or what we do, is really we are a lender, right? We are out there lending folks. Today’s pricing in the marketplace is a SOFR, let’s say SOFR 350 to SOFR 400. We are out there with a lot of loans in our pipeline and a lot of business that is being brought to us, and we should be able to keep doing that. At the same time, while that is going on, the folks in ALCO at the bank are actively looking at any opportunity to lower what our interest expense, right?

If our money gets cheaper and our money going out the door stays somewhat flat, right, that’s your NIM expansion right there in a nutshell. Really nothing more complicated than that. Easy banking.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Very good. Okay. This question is, it’s not addressed to anybody in particular, so I’ll just ask it and the three of you can opine. It has to do with deposit mix. Deposits grew by approximately $81 million, roughly a 9.25% quarter-over-quarter growth. What’s driving this type of growth, and how is the deposit mix evolving, interest-bearing versus non-interest-bearing, and any thoughts on future funding growth?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: I’ll answer that one also. Easy enough. We’ve talked about year over year where our customer base is like a cult following. That remains true. As we continue to grow, we continue to add members to the family here, and we continue to grow our deposit base. Historically, if you look at our numbers year in and year out, we run about one-third of non-interest-bearing deposits. From the other two-thirds, we run half of that as really relationship money that wants a higher interest rate, bigger depositors, or this or that. Two-thirds of our real customers are our people. The last third is really quick rate and raising money where we do not really have a relationship so much with the customer. We have to be within a market range to be able to attract deposits.

That being said, month over month, quarter over quarter, it remains true that the folks that are our people, their businesses are thriving and growing. I think you see it nationally as well. I think deposits are up. That’s the same thing by us. If we need more deposits, we’re able to raise them in reason and quick rate. That’s how our model works. It’s really centric to taking care of our people, and they remain loyal to us, and that’s where our deposits come from.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Okay. Very good. Next question is asking about loan growth. It says total loans grew about $29 million. Which loan segments are driving that growth? Which segments are contracting? And how do you feel about overall credit risk?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: I’ll let Tim answer that.

Tim Terry, President and CEO, OptimumBank Holdings: I wouldn’t say that any categories are necessarily contracting, but as has been the case in the past, the majority of our growth is in commercial real estate. In addition to the growth that’s seen there through September 30, we funded $50 million in new loans in October. We’ll do $50 million probably in November and $50 million in December also. As far as asset quality goes, our asset quality is strong. We haven’t changed our underwriting metrics, and we hold our borrowers to a relatively high standard.

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: Yeah. I would add to what Tim said is that, again, our borrowers are also kind of part of the family that are the cult following. We get vanilla deals from people that want to bank with us. They could rate shop and probably find a half a point cheaper than us or a quarter point cheaper, but they do not get what they get in our bank and our white glove service. With that, when they come in with a deal that, and like Tim said, it is mainly CRE, but when they come in with a deal that is for multifamily, and then the next guy is coming in for a hotel deal, and the third guy after that is coming in for a healthcare deal, right? We are not saying that concentration limit stops us for that segment, and we just take care of our customers.

We manage concentration risk differently outside of that point because we want to take care of our family members and give them what they need. Especially, we know we’re not getting burnt on any of these deals. These are all people that are our customers that know us, we know them. The theme, by the way, of family, which is we’re having our 25-year celebration. The theme of family is what I’m pushing because that’s how I feel. Certainly, the way it’s been here for at least the last 10 years. I’ve been involved in the bank about 16 years. Maybe not day one was family-centered, but certainly within the last 10 years, everyone came together. Really, it’s a testament to our results, it’s really the people that are part of the family here: the employees, management, board members, customers, depositors, borrowers.

It’s all to that. When somebody comes with a need, as long as it fits our policies, we’ll find a way to do it. That just added a little color to how the pipeline and the lending goes.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Okay. Our next question emailed was dealing with our capital to total assets. We ended the quarter at 11.7%. How does management evaluate capital adequacy relative to regulatory requirements and internal targets? Does this create room for additional balance sheet growth or M&A?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: Beautiful. You want to answer that, Elliot?

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Sure. I’ll only answer whatever you say. So just say whatever you want.

Tim Terry, President and CEO, OptimumBank Holdings: No, that’s fine. In terms of the capital, I mean, when you look at our numbers versus peer-to-peer results, we have a very robust capital structure. We ended up at 11.71. When we look at our bank, we are under the community bank leverage ratio, which mandates a well-capitalized bank to be 9%. So we’re well above that. In terms of our own internal policies, we do take a consideration in our loan portfolio. We do some stress testing of our loans, and we make sure we have a little bit of buffer above that. Definitely, our capital on a go-forward basis, we expect it to be higher than 10% for sure, probably higher than 11 by the time we get to year-end.

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: What I would add to that outside of his point is that we’ve never had a problem raising equity, whether it be friends or family or open market, if the stock price is where it should be. That being said, we are aggressively searching for mergers and purchases of banks to grow our bank besides for what we’re doing in regular growth, which, like we said, over the last five years is about 35% growth. We are looking actively for that. At some point, we will raise capital in the open market with the investment bankers that we have already made relationships with. We expect to not have a problem to raise the money that we need to be able to handle our balance sheet growth that we expect to have.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Very good. I have one last question here. How is the bank positioning itself competitively amid regional CRE dynamics, deposit competition, and the broader economic environment?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: I mean, that’s the same answer to everything else. It’s all family. If a guy’s a rate shopper and they come to us and they’re looking for a better rate, I personally, if I talk to them, I say, "Go to the other bank." If that’s what your metric that matters to you, then go get cheaper money. If what matters to you is for you to have a lender that you can call at 8:00 P.M., 9:00 P.M., and you can have someone that can turn something around quickly, that even before committee approval, we’ll already have the appraisal order and start loan docs, right? You want to use our bank at the end of the day.

Not to say that we want every deal to be like that, but the point is that we’re not, what differentiates us is really our white glove and our culture that we have here and how we take care of our people. Our results are a testament that what we’re doing is doing right by our customers, and that’s why we’re growing the way we’re growing. I think that’s really the answer. It comes down to the family concept again, and that’s where our success lies.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: That was supposed to be our last question, but I just got a last one here emailed now. Do you feel like you can attract New York City depositors given recent events? Is Florida an attractive destination anyway for New Yorkers? Do you feel this could be a catalyst the bank could expand on?

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: That’s fine.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: By the way, great work just thinking of some of the out-of-the-box ideas.

Moshe Gubin, Chairman of the Board, OptimumBank Holdings: All right. God bless, whoever that’s from. The starting point for us is our customer base today is not necessarily South Florida clientele. For the lending side of it, we want to have a connection to South Florida. For the deposit side of it, really, it’s the world at large. As long as we know the customer, which is our number one standard, we’re able to open up accounts for people that could be in Israel, it could be in Japan, it could be in India, it could be New York.

I think we have a lot of opportunity, assuming I’m alive and I’m well, we should be able to take this bank and at some point be in New York, at some point be in Illinois, at some point maybe a couple of other places throughout the country where our network from our board, including myself, is strong and where there’s people that would support us, right? Because it’s all about doing good business, right? The general thought is, for us, we’re Floridians today. My heart, I still a little bit New York, but relatively, I’m a Floridian today. And good banking, you got to know your customer, you got to know your market, and you got to know really what’s going on where you are.

For us to really go crazy and start lending in New York, we do a little bit of loans in New York, but it’s really a Florida customer or someone we know, part of the family. Like I say, I’m going to keep drilling in the next 12 months. I don’t think the current political situation in New York particularly is going to change our bank and where people are going to come to us because I think the people already come to us that are our customers. I think Florida in the whole is going to benefit because I think people are going to flock here. Who needs to? That’s the straw on the camel’s back.

Anyone who was miserable beforehand walking over homeless people on 7th Avenue, and now it’s like, "All right, I’m done with this." You can’t give up the Rangers that easy or the Mets, but yeah, I think it’ll be I don’t think it’ll be necessarily a big boon to us. It’ll be a boon to Florida, and Florida’s booming to start with.

Seth Denison, Managing Director of Investor Relations, OptimumBank Holdings: Okay. Gentlemen, unless you have any parting words, that was the last question that we had. Let me just check my email one last time, see if that was it. That was the last question. With that, I appreciate everybody taking the time today, and this will wrap up our Q3 earnings call. John, I’ll hand it back to you to tie it off.

Conference Operator: Thank you. This concludes today’s call. Thank you for attending. You may now disconnect.