OptimumBank Holdings 2026 Q3 Earnings Call

Please go ahead. Good morning, everyone, and thank you for joining us today for OptimumBank Holdings third quarter 2026 earnings webcast.

My name is Seth Denison, Managing Director of Investor Relations for OptimumBank. Joining me today are Moishe Gubin, our Chairman and Chief Executive Officer, Braden Smith, our President, and Elliot Nunez, our Chief Financial Officer. The third quarter marked another significant milestone in OptimumBank's continued evolution. Our organization reached nearly $1.6 billion in total assets, established another quarterly earnings record, and continued demonstrating the strength of the banking franchise we have built over the past 26 years. Beyond our financial performance, which Moishe and Elliot will discuss in greater detail shortly, we continued making meaningful progress on several strategic initiatives designed to support our next phase of growth. OptimumFinance continued growing its portfolio during the quarter and is becoming a contributor to our earnings.

OptimumFunding is also supporting our existing healthcare lending activities at the bank, including lending to nursing home operators. Additionally, OptimumFunding is pursuing a new HUD license, which we anticipate receiving in 2027, further expanding our capabilities and creating additional opportunities in the healthcare lending market. Together, these businesses broaden our lending capabilities, strengthen our relationships with specialized borrowers, and create additional opportunities for growth. Another encouraging development during the third quarter was the dramatic increase in investor interest in OptimumBank, coinciding with Moishe's first full quarter as CEO. On July 1st, our common stock closed at $5.88 per share, with just 4,500 shares traded that day. By September 30th, our shares closed at $8.72, representing nearly a 50% appreciation, while daily trading volume had increased approximately 14-fold.

Over the course of those three months, more than 7.6 million shares changed hands, averaging approximately 119,000 shares per trading day. We view this substantial increase in market activity as an encouraging indication that a much broader investment audience is discovering OptimumBank and beginning to recognize the value of the franchise we have built. While we are certainly pleased with the progress we have made, our attention remains firmly on the future. We believe OptimumBank has significant opportunities ahead, and our management team remains committed to disciplined execution, responsible growth, and creating lasting value for our 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 10-Q, 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. Slide three provides a brief introduction to the members of our leadership team joining us today. Collectively, they bring decades of banking, financial, and executive leadership experience, along with a shared commitment to OptimumBank's continued growth and success. Following the presentation, Moshe, Braden, and Elliot will be available to answer questions during our Q&A session. Viewers are encouraged to submit questions at any time during the presentation by emailing me directly at sdenison@optimumbank.com. I am going to spell that out for you. That is S-D-E-N-I-S-O-N @optimum, O-P-T-I-M-U-M, bank, B-A-N-K.com.

With that, I will turn it over to Moshe to begin the presentation.

Thank you, Seth, and good morning, everyone. This slide illustrates OptimumBank's evolution, a journey that began 26 years ago. Having been involved with the bank for more than 16 years, I have watched it grow from a relatively small community bank into a rapidly growing financial institution with a substantially broader range of capabilities. Now, in my first full quarter as Chief Executive Officer, I am particularly encouraged by both the progress we have made and the opportunities I see ahead of us. Our strategy remains grounded in the same principles that have guided our success over the years: disciplined lending, strong customer relationships, prudent risk management, and a commitment to operating efficiently. What has changed is the scale at which we are executing that strategy. As we continue to grow, one of my priorities is ensuring that our operating infrastructure evolves alongside the bank.

We have been taking a close look at our operations, identifying opportunities to streamline processes, improving productivity, and limiting expenses. We have already identified efficiencies that we expect to begin realizing over the next several quarters, even as we continue investing in the people, technology, and capabilities necessary to support our growth. I believe there is considerable opportunity to improve operating leverage as our organization expands. We are not simply focused on becoming a larger bank. We are focused on building a stronger, more efficient, and more profitable institution that can consistently generate attractive returns for our shareholders. As the new CEO, I intend to help guide the next chapter of this evolution with the ambition of making OptimumBank one of Florida's strongest and best-performing community banks. With that perspective, let me turn to our third quarter performance and some of the factors driving our continued momentum.

Turning to slide five, our third quarter results demonstrate that OptimumBank continues to deliver strong growth while translating that growth into meaningful improvements in profitability. We reported record quarterly net income of approximately $7.2 million, an increase of 7.8% over the second quarter and 65.9% compared with the third quarter of last year. These results reflect the continued strength of our core banking operations and the earnings power of our expanding franchise. Particularly encouraging was the growth in our pre-tax, pre-provision earnings, which reached $10.6 million, an increase of 20.7% from the second quarter and 65.3% year-over-year. This is an important measure of our underlying operating performance and demonstrates our ability to generate increasingly strong earnings as the bank continues to grow.

Net interest income increased to $16.8 million, up 14.2% from the second quarter, while our net interest margin expanded to 4.63%, an improvement of 6 basis points sequentially and 26 basis points compared with the same quarter last year. We also achieved another significant milestone during the quarter, with combined interest and non-interest income reaching nearly $28 million. This represents an annualized gross income run rate exceeding $112 million, a remarkable achievement that reflects the expanding scale of our operations and the substantial earning capacity of the franchise we have built. Our balance sheet also continued expanding, with total assets reaching approximately $1.6 billion, supported by strong loan and deposit growth. At the same time, tangible book value per diluted share increased to $5.98, representing a 20.3% improvement from September 30 of last year.

Importantly, we also strengthened our capital position considerably during the quarter, with our Tier 1 leverage ratio increasing to 12.23%, providing additional capacity to support our continued expansion. One of the highlights of this slide is the improvement in quarterly diluted earnings per share, from $0.18 in the third quarter of 2025 to $0.30 in the third quarter of 2026. That represents an increase of approximately 67% year-over-year. Third quarter earnings per share were $0.30 on both a basic and diluted basis, following the preferred stock exchange completed earlier this year. Overall, I am extremely pleased with the consistency of our performance. We are growing, generating increasingly strong earnings, strengthening our capital position, and creating additional value for our shareholders. Now let's turn to slide six for a closer look at our core operating profitability.

Turning to slide six, I want to highlight two measures that I believe are particularly important in evaluating the underlying profitability of OptimumBank. The first is our pre-tax, pre-provision earnings reached $10.6 million in the third quarter, compared with $8.8 million in the preceding quarter and $6.4 million a year ago. Importantly, our current quarterly performance translates to an annualized earnings run rate exceeding $42 million, demonstrating the substantial earnings capacity we have developed as our organization continues to grow. The second is our annualized core return on average equity, which increased to 29.6% compared with 26.9% in the second quarter and 22.4% a year ago. Our annualized GAAP return on average equity was approximately 20% for the quarter.

What I find particularly encouraging is that we are achieving these returns while continuing to expand our balance sheet, strengthen our capital position, and invest in the future of the organization. Turning to slide seven, I believe this is one of the most compelling illustrations of what we have accomplished at OptimumBank over the past several years. Since the end of 2022, our total assets have grown from approximately $585 million to nearly $1.6 billion, representing a compounded annual growth rate of 30.2%. That growth has been supported by the continued expansion of our lending operations, our geographic footprint, and the capabilities of our organization. During that same period, our employee count has increased from 48 to 119, reflecting the investments we have made in building the team and infrastructure necessary to support a much larger banking franchise.