OptimumBank Holdings, Inc. (OPHC)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 delivered solid core profitability: net earnings of $3.60M and diluted EPS of $0.29 despite a $1.04M credit loss provision; net interest income rose to $10.24M on an expanded NIM of 4.32% .
• EPS materially beat Wall Street consensus by $0.14 (actual $0.29 vs. $0.15 consensus; 1 estimate) driven by higher loan yields and lower funding costs; consensus coverage on revenue was unavailable for this period .*
• Balance sheet mix improved: total deposits increased $25.93M QoQ to $878.87M; noninterest-bearing demand deposits rose to $259.82M; loan-to-deposit fell to 88.13%, and average borrowings declined to $2.22M .
• Asset quality strengthened: nonaccrual loans decreased to $3.22M (from $7.51M in Q1) following resolution of a $5.6M NPL at par; ACL reached $9.34M (1.19% of loans) .
• Management clarified growth trajectory: targeting >$1.2B in total assets by YE 2025 and $1.5–$1.6B by YE 2026; investments continue toward FDICIA 363 compliance readiness by 2026 .

What Went Well and What Went Wrong

What Went Well

• Net interest margin expanded 26 bps QoQ to 4.32% on higher earning asset yields (6.57%) and lower cost of interest-bearing liabilities (3.49%), showcasing disciplined deposit pricing and funding optimization .
• Funding strength: deposits +$25.93M QoQ (to $878.87M) with mix improvement via noninterest-bearing demand deposits ($259.82M); average borrowings fell to $2.22M, lowering funding costs .
• Management quote underscoring strategy and execution: “disciplined deposit pricing, targeted growth in consumer and multi-family lending, and improved operating leverage” drove core earnings .

What Went Wrong

• Provisioning uptick: a $1.04M credit loss expense tied to a single commercial loan reduced sequential earnings vs. Q1 .
• Noninterest expense rose $0.55M QoQ to $6.18M (higher salaries/benefits, infrastructure investments), pressuring the efficiency ratio albeit remaining ~51% .
• EPS down QoQ ($0.29 vs. $0.32) on provision and cost growth, despite stronger NIM and deposit mix improvement .

Financial Results

Segment breakdown – Ending Loans ($USD Thousands)

KPIs

Guidance Changes

No formal quantitative guidance was provided for revenue, EPS, margins, OpEx, OI&E, tax rate, or dividends in Q2 materials .

Earnings Call Themes & Trends

Management Commentary

• “Strong and resilient performance… meaningful core earnings through disciplined deposit pricing, targeted growth in consumer and multi-family lending, and improved operating leverage” — Chairman Moishe Gubin .
• “NIM expanded to 4.32%… cost of interest-bearing liabilities improved to 3.49%… redeploy capital into higher return opportunities” — CFO Elliot Nunez .
• “We have not changed our underwriting standards… excellent asset quality” — CEO Tim Terry .
• “On FDICIA… contracted with an outside firm… documenting workflows and testing key controls… ready by 2026” — CFO Elliot Nunez .
• “Plan to exceed $1.2B by end of 2025 and reach $1.5–$1.6B by 2026” — Chairman Moishe Gubin (clarification press release) .

Q&A Highlights

• Provision specifics: $1.04M reserve relates to a single commercial loan in nursing home AR; management expects full repayment; prudent specific allowance in a strong quarter .
• Underwriting: No change to standards as the bank approaches $1B in assets; commitment to high asset quality .
• FDICIA readiness: Multi-phase internal control program underway in 2025; targeting clean opinions and compliance by 2026 .
• AI stance: Not using AI for loan approvals; belief that traditional analysis provides superior outcomes currently .
• NPL resolution: $5.6M nonperforming loan sold at full book value; reduced NPAs and improved allowance quality .

Estimates Context

• Revenue consensus was unavailable for Q2 2025; the street coverage is limited for OPHC’s revenue line in banking context. Actual noninterest income was $1.83M and net interest income was $10.24M .
• Expect estimate revisions to reflect stronger NIM and funding cost reductions, as well as improved asset quality trajectory .

Values marked with * were retrieved from S&P Global.

Key Takeaways for Investors

• EPS beat vs. consensus driven by NIM expansion and lower funding costs; deposit mix and reduced borrowings support margin durability — a positive near-term trading catalyst .
• Strengthening asset quality (NPL sale at par, nonaccrual down) reduces tail risk and supports multiple expansion for bank peers focused on credit discipline .
• Balance sheet flexibility (loan-to-deposit down to 88%) positions OPHC to redeploy into higher-return segments (consumer, multifamily) in H2 2025 .
• Operating scale investments (staffing, FDICIA readiness) modestly lift OpEx but are laying groundwork for sustainable growth beyond $1B in assets .
• Guidance clarity on asset trajectory (> $1.2B in 2025; $1.5–$1.6B in 2026) provides medium-term visibility; execution on deposit growth and loan origination pipeline will be the stock’s narrative driver .
• Watch deposit costs and competitive rate landscape; continued CD repricing and noninterest-bearing growth are key to maintaining NIM >4% .
• Near-term focus: monitor Q3 loan growth recovery (management expects stronger originations) and any further credit events; base case is continued clean quarters .