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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
--------- ---------
Commission File Number 0001288855
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OPTIMUMBANK HOLDINGS, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Florida 55-0865043
-------------------------------- -------------------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2477 East Commercial Boulevard
Fort Lauderdale, Florida 33308
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(954) 776-2332
-----------------------------------------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
---------------------------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED
SINCE LAST REPORT)
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 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 [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common stock, par value $.01 per share 2,657,502 shares
- -------------------------------------- ---------------------------
(CLASS) OUTSTANDING AT MAY 13, 2005
Transitional Small Business Format (check one): YES [ ] NO [ X ]
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CONFORMED COPY
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS PAGE
Condensed Consolidated Balance Sheets -
March 31, 2005 (unaudited) and December 31, 2004.........................2
Condensed Consolidated Statements of Earnings -
Three Months ended March 31, 2005 and 2004 (unaudited)...................3
Condensed Consolidated Statements of Stockholders' Equity -
Three Months ended March 31, 2005 and 2004 (unaudited)...................4
Condensed Consolidated Statements of Cash Flows -
Three Months ended March 31, 2005 and 2004 (unaudited)...................5
Notes to Condensed Consolidated Financial Statements (unaudited).........6-9
Review By Independent Registered Public Accounting Firm...................10
Report of Independent Registered Public Accounting Firm...................11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS..............................................12-15
ITEM 3. CONTROLS AND PROCEDURES............................................16
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..................................16
SIGNATURES....................................................................17
1
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
MARCH 31, DECEMBER 31,
--------- ---------
2005 2004
--------- ---------
(UNAUDITED)
ASSETS
Cash and due from banks $ 473 $ 383
Federal funds sold 139 2,840
--------- ---------
Total cash and cash equivalents 612 3,223
Securities held to maturity (fair value approximates $30,558 and
$24,065) 30,815 24,134
Security available for sale 244 247
Loans, net of allowance for loan losses of $661 and $628 130,298 128,810
Loans held for sale 507 509
Federal Home Loan Bank stock 2,176 1,965
Premises and equipment, net 4,128 4,114
Accrued interest receivable 897 878
Other assets 563 678
--------- ---------
Total assets $ 170,240 $ 164,558
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits $ 722 $ 558
Savings, NOW and money-market deposits 7,569 8,091
Time deposits 91,043 89,345
--------- ---------
Total deposits 99,334 97,994
Federal Home Loan Bank advances 41,050 37,650
Other borrowings 5,000 5,000
Junior subordinated debenture 5,155 5,155
Other liabilities 739 522
Official checks 1,514 1,209
Deferred income tax liability 305 305
--------- ---------
Total liabilities 153,097 147,835
--------- ---------
Stockholders' equity:
Common stock, $.01 par value; 6,000,000 shares authorized,
2,657,502 and 2,650,102 shares issued and outstanding 27 27
Additional paid-in capital 14,090 14,051
Retained earnings 3,032 2,648
Accumulated other comprehensive income (loss) (6) (3)
--------- ---------
Total stockholders' equity 17,143 16,723
--------- ---------
Total liabilities and stockholders' equity $ 170,240 $ 164,558
========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
2
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED
MARCH 31,
-----------------
2005 2004
------ ------
Interest income:
Loans $2,072 $1,932
Securities 299 194
Other 45 21
------ ------
Total interest income 2,416 2,147
------ ------
Interest expense:
Deposits 781 683
Borrowings 416 268
------ ------
Total interest expense 1,197 951
------ ------
Net interest income 1,219 1,196
Provision for loan losses 33 30
------ ------
Net interest income after provision for loan losses 1,186 1,166
------ ------
Noninterest income:
Service charges and fees 48 38
Prepayment fees collected 187 181
Other 23 2
------ ------
Total noninterest income 258 221
------ ------
Noninterest expenses:
Salaries and employee benefits 473 414
Occupancy and equipment 141 108
Data processing 51 38
Professional fees 42 33
Insurance 16 12
Stationary and supplies 10 16
Other 94 81
------ ------
Total noninterest expenses 827 702
------ ------
Earnings before income taxes 617 685
Income taxes 233 261
------ ------
Net earnings $ 384 $ 424
====== ======
Net earnings per share:
Basic $ .14 $ .16
====== ======
Diluted $ .14 $ .16
====== ======
See Accompanying Notes to Condensed Consolidated Financial Statements.
3
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(DOLLARS IN THOUSANDS)
ACCUMULATED
OTHER
COMPRE-
COMMON STOCK ADDITIONAL HENSIVE TOTAL
--------------------- PAID-IN RETAINED INCOME STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS (LOSS) EQUITY
--------- --------- ---------- -------- ------------ ------------
Balance at December 31, 2003 2,613,501 $ 26 13,800 1,078 (4) 14,900
---------
Comprehensive income:
Net earnings for the three
months ended March 31,
2004 (unaudited) -- -- -- 424 -- 424
Net change in unrealized loss on
security available for sale
(unaudited) -- -- -- -- 4 4
---------
Comprehensive income (unaudited) 428
---------
Proceeds from sale of common stock,
net (unaudited) 475 -- 5 -- -- 5
---------
Proceeds from exercise of common
stock options (unaudited) 17,334 -- 90 -- -- 90
--------- --------- --------- --------- --------- ---------
Balance at March 31, 2004
(unaudited) 2,631,310 $ 26 13,895 1,502 -- 15,423
========= ========= ========= ========= ========= =========
Balance at December 31, 2004 2,650,102 $ 27 14,051 2,648 (3) 16,723
---------
Comprehensive income:
Net earnings for the three
months ended March 31,
2005 (unaudited) -- -- -- 384 -- 384
Net change in unrealized loss on
security available for sale
(unaudited) -- -- -- -- (3) (3)
--------- ---------
Comprehensive income (unaudited) 381
---------
Proceeds from exercise of common
stock options (unaudited) 7,400 -- 39 -- -- 39
--------- --------- --------- --------- --------- ---------
Balance at March 31, 2005
(unaudited) 2,657,502 $ 27 14,090 3,032 (6) 17,143
========= ========= ========= ========= ========= =========
See Accompanying Notes to Condensed Consolidated Financial Statements.
4
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
2005 2004
------- -------
Cash flows from operating activities:
Net earnings $ 384 $ 424
Adjustments to reconcile net earnings to net cash provided by
(used in) operating activities:
Depreciation and amortization 67 40
Provision for loan losses 33 30
Net amortization of fees, premiums and discounts 25 67
Repayments of loans held for sale 2 8
Increase in accrued interest receivable (19) (25)
Decrease (increase) in other assets 115 (610)
Increase (decrease) in official checks and other liabilities 522 (24)
------- -------
Net cash provided by (used in) operating activities 1,129 (90)
------- -------
Cash flows from investing activities:
Purchases of securities held to maturity (7,843) --
Principal repayments of securities held to maturity 1,187 516
Net (increase) decrease in loans (1,571) 1,224
Purchase of premises and equipment (81) (104)
Net (increase) decrease in Federal Home Loan Bank stock (211) 142
------- -------
Net cash (used in) provided by investing activities (8,519) 1,778
------- -------
Cash flows from financing activities:
Net increase in deposits 1,340 9,910
Net decrease in other borrowings -- (1,250)
Proceeds from sale of common stock, net -- 5
Proceeds from exercise of common stock options 39 90
Net increase (decrease) in Federal Home Loan Bank advances 3,400 (1,850)
------- -------
Net cash provided by financing activities 4,779 6,905
------- -------
Net (decrease) increase in cash and cash equivalents (2,611) 8,593
Cash and cash equivalents at beginning of the period 3,223 539
------- -------
Cash and cash equivalents at end of the period $ 612 $ 9,132
======= =======
Supplemental disclosure of cash flow information: Cash paid during the period
for:
Interest $ 1,370 $ 950
======= =======
Income taxes $ 224 $ 120
======= =======
Noncash investing activity-
Change in accumulated other comprehensive (loss) income,
net change in unrealized loss on security available for sale $ (3) $ 4
======= =======
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 "Holding Company") is a
one-bank holding company and owns 100% of OptimumBank (the "Bank"), a
state (Florida)-chartered commercial bank (collectively, the
"Company"). The Holding Company's only business is the operation of
the Bank. The Bank's deposits are insured by the Federal Deposit
Insurance Corporation. The Bank offers a variety of community banking
services to individual and corporate customers through its three
banking offices located in Broward County, Florida.
In the opinion of the 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 March 31, 2005,
and the results of operations and cash flows for the three-month
periods ended March 31, 2005 and 2004. The results of operations for
the three months ended March 31, 2005, are not necessarily indicative
of the results to be expected for the full year.
(2) LOAN IMPAIRMENT AND CREDIT LOSSES. The activity in the allowance for loan
losses was as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
-------------------
2005 2004
----- -----
Balance at beginning of period $ 628 $ 492
Provision for loan losses 33 30
----- -----
Balance at end of period $ 661 $ 522
===== =====
The following summarizes the amount of impaired loans, all of which are
collateral dependent (in thousands):
AT
-----------------------
MARCH 31, DECEMBER 31,
2005 2004
------ ------
Loans identified as impaired:
Gross loans with related allowance for
losses recorded $3,268 $3,268
Less allowance for losses on these loans -- --
------ ------
Net investment in impaired loans $ 3,268 $ 3,268
===== ======
The average net investment in impaired loans and interest income
recognized and received on impaired loans is as follows (in thousands):
THREE MONTHS ENDED
MARCH 31,
--------------------
2005 2004
-------- --------
Average net investment in impaired loans $ 3,268 $ --
======= ========
Interest income recognized on impaired loans $ -- $ --
======= ========
Interest income received on impaired loans $ -- $ --
======= ========
6
(continued)
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(3) REGULATORY CAPITAL. The Company and the Bank are required to maintain
certain minimum regulatory capital requirements. The following is a
summary at March 31, 2005 of the regulatory capital requirements and
the Company's and the Bank's capital on a percentage basis:
REGULATORY
COMPANY BANK REQUIREMENT
------- ---- -----------
Tier I capital to total average assets 13.32% 13.22% 4.00%
Tier I capital to risk-weighted assets 19.81% 19.67% 4.00%
Total capital to risk-weighted assets 20.40% 20.26% 8.00%
(4) EARNINGS PER SHARE. Basic earnings per share has been computed on
the basis of the weighted-average number of shares of common stock
outstanding during the period. Diluted earnings per share were
computed based on the weighted average number of shares outstanding
plus the effect of outstanding stock options, computed using the
treasury stock method. Earnings per common share have been computed
based on the following:
THREE MONTHS ENDED
MARCH 31,
-----------------------
2005 2004
--------- ---------
Weighted average number of common shares outstanding used
to calculate basic earnings per common share 2,653,802 2,622,037
Effect of dilutive stock options 103,610 56,540
--------- ---------
Weighted average number of common shares outstanding used
to calculate diluted earnings per common share 2,757,412 2,678,577
========= =========
(continued)
7
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
(5) STOCK OPTIONS. The Company established a Stock Option Plan (the
"Plan") for officers, directors and employees of the Company and
reserved 522,000 shares of common stock for the Plan. Both
incentive stock options and nonqualified stock options may be
granted under the Plan. The exercise price of the stock options is
determined by the board of directors at the time of grant, but
cannot be less than the fair market value of the common stock on
the date of grant. The options vest over three and five years. The
options must be exercised within ten years from the date of grant.
A summary of the activity in the Company's stock option plan is as
follows (dollars in thousands, except per share amounts):
RANGE OF WEIGHTED-
PER SHARE AVERAGE AGGREGATE
NUMBER OF OPTION EXERCISE OPTION
SHARES PRICE PRICE PRICE
Outstanding at December 31, 2004 370,433 $ 5.00-10.00 $ 7.19 $ 2,662
Granted 10,000 12.49 12.49 125
Exercised (7,400) 5.00-6.75 5.33 (39)
Forfeited (3,000) 6.75-10.00 8.37 (25)
-------- ------------ --------- --------
Outstanding at March 31, 2005 370,033 $ 5.00-12.49 $ 7.36 $ 2,723
======== ============ ====== ========
(continued)
7
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
(5) STOCK OPTIONS, CONTINUED. The Company accounts for their stock option
plan under the recognition and measurement principles of Accounting
Principles Board Opinion No. 25 Accounting for Stock Issued to
Employees. No stock-based employee compensation cost is reflected in
net earnings, as all options granted under this plan had an exercise
price which approximated the market value of the underlying common
stock on the date of grant. The following table illustrates the
effect on net earnings if the Company had applied the fair value
recognition provisions of Statement of Financial Accounting Standards
No. 123 Accounting for Stock-Based Compensation, as amended by SFAS
No. 148, Accounting for Stock-Based Compensation Transition and
Disclosure to stock-based employee compensation (in thousands, except
per share amounts).
THREE MONTHS ENDED
MARCH 31,
------------------
2004 2005
------ -------
Net earnings, as reported $ 384 $ 424
Deduct: Total stock-based employee compensation
determined under the fair value based method for all
awards, net of related tax effect (44) (14)
------ -------
Proforma net earnings $ 340 $ 410
====== =======
Basic earnings per share:
As reported $ .14 $ .16
====== =======
Proforma $ .13 $ .16
====== =======
Diluted earnings per share:
As reported $ .14 $ .16
====== =======
Proforma $ .12 $ .15
====== =======
9
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
REVIEW BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Hacker, Johnson & Smith PA, the Company's independent registered public
accounting firm, have made a limited review of the interim financial data as of
March 31, 2005, and for the three-month periods ended March 31, 2005 and 2004,
presented in this document, in accordance with standards established by the
Public Company Accounting Oversight Board.
Their report furnished pursuant to Article 10 of Regulation S-X is included
herein.
10
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
OptimumBank Holdings, Inc.
Plantation, Florida:
We have reviewed the accompanying condensed consolidated balance sheet of
OptimumBank Holdings, Inc. and Subsidiary (the "Company") as of March 31, 2005,
and the related condensed consolidated statements of earnings, stockholders'
equity and cash flows for the three-month periods ended March 31, 2005 and 2004.
These interim financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with the standards of the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying interim condensed consolidated financial
statements for them to be in conformity with U.S. generally accepted accounting
principles.
We have previously audited, in accordance with the standards of the Public
Company Accounting Oversight Board, the consolidated balance sheet as of
December 31, 2004, and the related consolidated statements of earnings,
stockholders' equity and cash flows for the year then ended (not presented
herein); and in our report dated February 22, 2005, we expressed an unqualified
opinion on those financial statements. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of December 31,
2004, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Hacker, Johnson & Smith PA
HACKER, JOHNSON & SMITH PA
Fort Lauderdale, Florida
April 21, 2005
11
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF MARCH 31, 2005 AND DECEMBER 31, 2004
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash during the three months ended March
31, 2005 were from net deposit inflows of approximately $1.3 million,
principal repayments of securities held to maturity of approximately $1.2
million and Federal Home Loan Bank advances of $3.4 million. Cash was used
primarily for net loan originations of approximately $1.6 million and
purchases of securities held to maturity of approximately $7.8 million. At
March 31, 2005, the Company had time deposits of approximately $47.9 million
that mature in one year or less. At March 31, 2005, the Company exceeded its
regulatory liquidity requirements. Management believes that, if so desired,
it can adjust the rates on time deposits to retain or attract deposits in a
changing interest-rate environment.
The following table shows selected information for the periods ended or at
the dates indicated:
THREE MONTHS THREE MONTHS
ENDED YEAR ENDED ENDED
MARCH 31, DECEMBER 31, MARCH 31,
2005 2004 2004
-------- -------- --------
Average equity as a percentage
of average assets 10.24% 10.53% 10.66%
Equity to total assets at end of period 10.07% 10.16% 10.82%
Return on average assets (1) .92% 1.06% 1.21%
Return on average equity (1) 9.03% 10.05% 11.35%
Noninterest expenses to average assets (1) 1.99% 1.89% 2.00%
Nonperforming loans to total assets at end
of period 1.92% 2.54% --%
(1) Annualized for the three months ended March 31, 2005 and 2004.
12
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, CONTINUED
OFF-BALANCE SHEET ARRANGEMENTS AND AGGREGATE CONTRACTUAL OBLIGATIONS
The Company is a 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 include commitments to extend credit
and undisbursed loans in process. These instruments involve, to varying
degrees, elements of credit and interest-rate risk in excess of the amounts
recognized in the consolidated balance sheet. The contract or notional
amounts of those instruments reflect the extent of the Company's involvement
in particular classes of financial instruments.
The Company's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit and
undisbursed loans in process 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. Since many of the commitments are
expected to expire without being drawn upon, the total committed amounts do
not necessarily represent future cash requirements. The Company evaluates
each customer's creditworthiness on a case-by-case basis. The amount of
collateral obtained, if it is deemed necessary by the Company upon extension
of credit, is based on management's credit evaluation of the counter party.
A summary of the amounts of the Company's financial instruments, with
off-balance sheet risk at March 31, 2005, follows (in thousands):
CONTRACT
AMOUNT
Commitments to extend credit $ 31,927
========
Undisbursed loans in process $ 2,357
========
Management believes that the Company has adequate resources to fund all of
its commitments and that substantially all its existing commitments will be
funded in the next twelve months.
13
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
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) ratio of average interest-earning assets to average
interest-bearing liabilities.
THREE MONTHS ENDED MARCH 31,
2005 2004
--------------------------------- ---------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- -------- ------ -------- -------- ----
Interest-earning assets:
Loans $125,942 $ 2,072 6.58% $114,594 $ 1,932 6.74%
Securities 27,158 299 4.40 16,568 194 4.68
Other interest-earning assets (1) 6,221 45 2.89 3,750 21 2.24
-------- -------- -------- --------
Total interest-earning assets/interest income 159,321 2,416 6.07 134,912 2,147 6.37
-------- -------- -------- --------
Cash and due from banks 99 -- -- 574 -- --
Premises and equipment 4,129 -- -- 1,950 -- --
Other assets 2,525 -- -- 2,726 -- --
-------- -------- -------- --------
Total assets $166,074 -- -- $140,162 -- --
======== ======== ======== ========
Interest-bearing liabilities:
Savings, NOW and money-market deposits 8,017 19 .95 7,705 28 1.45
Time deposits 89,928 762 3.39 77,973 655 3.36
Borrowings (2) 47,954 416 3.47 37,096 268 2.89
-------- -------- -------- --------
Total interest-bearing liabilities/interest
expense 145,899 1,197 3.28 122,774 951 3.10
-------- -------- -------- --------
Noninterest-bearing demand deposits 1,088 -- -- 751 -- --
Other liabilities 2,074 -- -- 1,689 -- --
Stockholders' equity 17,013 -- -- 14,948 -- --
-------- -------- -------- --------
Total liabilities and stockholders' equity $166,074 -- -- $140,162 -- --
======== ======== ======== ========
Net interest income -- $ 1,219 -- -- $ 1,196 --
======== ======== ======== ========
Interest rate spread (3) -- -- 2.79% -- -- 3.27%
======== ======== ======== ========
Net interest margin (4) -- -- 3.06% -- -- 3.55%
======== ======== ======== ========
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.09 -- -- 1.10 -- --
======== ======== ======== ========
(1) Includes interest-earning deposits with banks, Federal funds sold and
Federal Home Loan Bank stock dividends.
(2) Includes Federal Home Loan Bank advances, securities sold under an
agreement to repurchase and junior subordinated debenture.
(3) Interest rate spread represents the difference between 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.
14
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
COMPARISON OF THE THREE-MONTH PERIODS ENDED MARCH 31, 2005 AND 2004
GENERAL. Net earnings for the three months ended March 31, 2005, were
$384,000 or $.14 per basic and diluted share compared to net earnings of
$424,000 or $.16 per basic and diluted share for the period ended March
31, 2004.
INTEREST INCOME. Interest income increased to $2.4 million for the three
months ended March 31, 2005 from $2.1 million for the three months ended
March 31, 2004. Interest income on loans increased to $2.1 million due
primarily to an increase in the average loan portfolio balance for the
three months ended March 31, 2005, partially offset by a decrease in the
average yield earned from 6.74% for the three months ended March 31, 2004
to 6.58% for the three months ended March 31, 2005. Interest on securities
increased to $299,000 due primarily to an increase in the average balance,
partially offset by a decrease in the average yield earned on the
securities portfolio in 2005.
INTEREST EXPENSE. Interest expense on deposit accounts increased to $781,000
for the three months ended March 31, 2005, from $683,000 for the three
months ended March 31, 2004. Interest expense increased primarily because
of an increase in the average balance of deposits during 2005. Interest
expense on borrowings increased to $416,000 for the three months ended
March 31, 2005 from $268,000 for the three months ended March 31, 2004 due
to an increase in the average balance of borrowings.
PROVISION FOR LOAN LOSSES. The provision for loan losses is charged to
earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by the Company, industry standards, the amount of
nonperforming loans, general economic conditions, particularly as they
relate to the Company's market areas, and other factors related to the
estimated collectibility of the Company's loan portfolio. The provision
for the three months ended March 31, 2005, was $33,000 compared to $30,000
for the same period in 2004. Management believes the balance in the
allowance for loan losses of $661,000 at March 31, 2005, is adequate.
NONINTEREST INCOME. Total noninterest income increased to $258,000 for the
three months ended March 31, 2005, from $221,000 for the three months
ended March 31, 2004.
NONINTEREST EXPENSES. Total noninterest expenses increased to $827,000 for
the three months ended March 31, 2005 from $702,000 for the three months
ended March 31, 2004, primarily due to an increase in salaries and
employee benefits of $59,000, an increase in occupancy and equipment of
$33,000, and an increase in other expenses of $13,000 all due to the
continued growth of the Company.
INCOME TAXES. Income taxes for the three months ended March 31, 2005, were
$233,000 (an effective rate of 37.8%) compared to income taxes of $261,000
(an effective rate of 38.1%) for the three months ended March 31, 2004.
15
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
ITEM 3. CONTROLS AND PROCEDURES
a. Evaluation of Disclosure Controls and Procedures. The Company maintains
controls and procedures designed to ensure that information required to
be disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in the rules and forms of the
Securities and Exchange Commission. Based upon their evaluation of those
controls and procedures performed within 90 days of the filing date of
this report, the chief executive and principal accounting officers of the
Company concluded that the Company's disclosure controls and procedures
were adequate.
b. Changes in Internal Controls. The Company made no significant changes in
its internal controls or in other factors that could significantly affect
these controls subsequent to the date of the evaluation of those controls
by the chief executive and principal accounting officers.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS. The following exhibits are filed with or incorporated by reference
into this report. The exhibits denominated by an asterisk (*) were previously
filed as a part of a Registration Statement on Form 10-SB under the Exchange
Act, filed with the Federal Deposit Insurance Corporation on March 28, 2003;
(ii) a double asterisk (**) were previously filed as a part of an Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission on March 30,
2004; (iii) a triple asterisk (***) were previously filed as part of a current
report on Form 8-K filed with the Securities and Exchange Commission on May 11,
2004; and (iv) a quadruple asterisk (****)were previously filed as part of an
Annual Report on Form 10-KSB filed with the Securities and Exchange Commission
on March 31, 2005.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
---------- ----------------------
** 2 Agreement and Plan of Reorganization dated March 23, 2004
*** 3.1 Articles of Incorporation
*** 3.3 Bylaws
* 4.1 Form of stock certificate
**** 10.1 Amended and Restated Stock Option Plan
* 10.2 Nonemployee Directors Stock Purchase Plan
* 10.3 Agreement between OptimumBank, Albert J. Finch and Richard L.
Browdy dated June 14, 2002
31.1 Certification of Chief Executive Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act
31.2 Certification of Chief Financial Officer required by Rule
13a-14(a)/15d-14(a) under the Exchange Act
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
16
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
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: May 13, 2005 By: /s/ Albert J. Finch
----------------- ------------------------------------------
Albert J. Finch, Chief Executive Officer
Date: May 13, 2005 By: /s/ Richard L. Browdy
------------------------------------------
Richard L. Browdy, Chief Financial Officer
17