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 JUNE 30, 2004
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
Commission File Number 0001288855
Florida 55-0865043
------- ----------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
10197 Cleary Boulevard
Plantation, Florida 33324
-------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(954) 452-9501
--------------
(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 preceeding 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 2,634,150 shares
-------------------------------------- ----------------------------
(CLASS) OUTSTANDING AT JULY 31, 2004
|
Transitional Small Business Format (check one): YES [ ] NO [X]
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS PAGE
Condensed Consolidated Balance Sheets -
June 30, 2004 (unaudited) and December 31, 2003.................................2
Condensed Consolidated Statements of Earnings -
Three and Six Months ended June 30, 2004 and 2003 (unaudited)...................3
Condensed Consolidated Statements of Stockholders' Equity -
Six Months ended June 30, 2004 and 2003 (unaudited).............................4
Condensed Consolidated Statements of Cash Flows -
Six Months ended June 30, 2004 and 2003 (unaudited).............................5
Notes to Condensed Consolidated Financial Statements (unaudited)................6-8
Review By Independent Registered Public Accounting Firm...........................9
Report of Independent Registered Public Accounting Firm..........................10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.....................................................11-16
ITEM 3. CONTROLS AND PROCEDURES...................................................17
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.....................................................17
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.......................17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..........................................19
SIGNATURES............................................................................20
|
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
JUNE 30, DECEMBER 31,
ASSETS 2004 2003
--------- ---------
(UNAUDITED)
Cash and due from banks $ 419 $ 331
Federal funds sold 9,135 208
--------- ---------
Total cash and cash equivalents 9,554 539
Securities held to maturity 19,873 16,539
Security available for sale 243 246
Loans, net of allowance for loan losses of $547 and $492 116,243 111,320
Loans held for sale 1,390 1,406
Federal Home Loan Bank stock 1,958 1,525
Premises and equipment, net 2,031 1,912
Accrued interest receivable 1,269 1,224
Other assets 1,074 468
--------- ---------
Total assets $ 153,635 $ 135,179
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Noninterest-bearing demand deposits $ 695 $ 747
Savings, NOW and money-market deposits 10,296 6,436
Time deposits 78,352 73,561
--------- ---------
Total deposits 89,343 80,744
Official checks 1,068 439
Federal Home Loan Bank advances 39,150 29,500
Other borrowings 7,500 8,750
Other liabilities 166 262
Deferred income tax liability 584 584
--------- ---------
Total liabilities 137,811 120,279
--------- ---------
Stockholders' equity:
Common stock, $.01 par value; 6,000,000 shares authorized,
2,634,150 and 2,613,501 shares issued and outstanding 26 26
Additional paid-in capital 13,912 13,800
Retained earnings 1,893 1,078
Accumulated other comprehensive income (loss) (7) (4)
--------- ---------
Total stockholders' equity 15,824 14,900
--------- ---------
Total liabilities and stockholders' equity $ 153,635 $ 135,179
========= =========
|
See Accompanying Notes to Condensed Consolidated Financial Statements.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------- -----------------
2004 2003 2004 2003
------ ------ ------ ------
Interest income:
Loans $1,880 1,386 3,812 2,586
Securities 185 56 379 114
Other 29 20 50 40
------ ------ ------ ------
Total interest income 2,094 1,462 4,241 2,740
------ ------ ------ ------
Interest expense:
Deposits 679 540 1,362 1,019
Borrowings 264 145 532 255
------ ------ ------ ------
Total interest expense 943 685 1,894 1,274
------ ------ ------ ------
Net interest income 1,151 777 2,347 1,466
Provision for loan losses 25 48 55 83
------ ------ ------ ------
Net interest income after provision for loan losses 1,126 729 2,292 1,383
------ ------ ------ ------
Noninterest income:
Service charges and fees 39 34 77 55
Prepayment fees collected 148 31 329 73
Other 9 5 11 6
------ ------ ------ ------
Total noninterest income 196 70 417 134
------ ------ ------ ------
Noninterest expenses:
Salaries and employee benefits 402 290 816 547
Occupancy and equipment 101 72 209 131
Data processing 38 32 76 64
Professional fees 38 26 71 44
Insurance 13 11 25 22
Stationery and supplies 17 13 33 20
Other 81 62 162 120
------ ------ ------ ------
Total noninterest expenses 690 506 1,392 948
------ ------ ------ ------
Earnings before income taxes 632 293 1,317 569
Income taxes 241 112 502 217
------ ------ ------ ------
Net earnings $ 391 181 815 352
====== ====== ====== ======
Net earnings per share:
Basic $ .15 .07 .31 .14
====== ====== ====== ======
Diluted $ .14 .07 .30 .13
====== ====== ====== ======
|
See Accompanying Notes to Condensed Consolidated Financial Statements.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2004 AND 2003
(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, 2002 2,564,839 $ 26 13,496 104 -- 13,626
Net earnings for the six months ended
June 30, 2003 (unaudited) -- -- -- 352 -- 352
Proceeds from sale of common stock,
net of offering costs of $26
(unaudited) 48,169 -- 300 -- -- 300
--------- --------- --------- --------- --------- ---------
Balance at June 30, 2003 (unaudited) 2,613,008 $ 26 13,796 456 -- 14,278
========= ========= ========= ========= ========= =========
Balance at December 31, 2003 2,613,501 $ 26 13,800 1,078 (4) 14,900
---------
Comprehensive income:
Net earnings for the six months
ended June 30, 2004
(unaudited) -- -- -- 815 -- 815
Net change in unrealized loss on
security available for sale
(unaudited) -- -- -- -- (3) (3)
---------
Comprehensive income (unaudited) 812
---------
Proceeds from sale of common stock
(unaudited) 915 -- 9 -- -- 9
---------
Proceeds from exercise of common
stock options (unaudited) 19,734 -- 103 -- -- 103
--------- --------- --------- --------- --------- ---------
Balance at June 30, 2004 (unaudited) 2,634,150 $ 26 13,912 1,893 (7) 15,824
========= ========= ========= ========= ========= =========
|
See Accompanying Notes to Condensed Consolidated Financial Statements.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(IN THOUSANDS)
SIX MONTHS ENDED
JUNE 30,
-----------------------
2004 2003
-------- --------
Cash flows from operating activities:
Net earnings $ 815 352
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities:
Depreciation and amortization 81 42
Provision for loan losses 55 83
Net amortization of fees, premiums and discounts 97 177
Deferred income taxes -- 217
Repayments of loans held for sale 16 19
Increase in accrued interest receivable (45) (235)
Increase in other assets (606) (1,397)
Increase in official checks and other liabilities 533 9
-------- --------
Net cash provided by (used in) operating activities 946 (733)
-------- --------
Cash flows from investing activities:
Purchases of securities held to maturity (4,982) (2,250)
Principal repayments of securities held to maturity 1,655 2,522
Net increase in loans (5,082) (27,319)
Purchase of premises and equipment (200) (387)
Purchase of Federal Home Loan Bank stock (433) (498)
-------- --------
Net cash used in investing activities (9,042) (27,932)
-------- --------
Cash flows from financing activities:
Net increase in deposits 8,599 18,580
Proceeds from sale of common stock, net 9 300
Proceeds from exercise of common stock options 103 --
Net increase in Federal Home Loan Bank advances 9,650 9,950
Net decrease in other borrowings (1,250) --
-------- --------
Net cash provided by financing activities 17,111 28,830
-------- --------
Net increase in cash and cash equivalents 9,015 165
Cash and cash equivalents at beginning of the period 539 3,801
-------- --------
Cash and cash equivalents at end of the period $ 9,554 3,966
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 1,824 1,241
======== ========
Income taxes $ 649 --
======== ========
Noncash investing activity-
Change in accumulated other comprehensive income (loss)
net change in unrealized loss on security available for sale $ (3) --
======== ========
|
See Accompanying Notes to Condensed Consolidated Financial Statements.
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.
The Holding Company was formed on March 23, 2004 and on April 29, 2004, the Bank's stockholders approved a plan of corporate reorganization under which the Bank became a wholly-owned subsidiary of the Holding Company. Effective May 6, 2004, the Bank's stockholders exchanged their common shares for shares of the Holding Company. As a result, all of the previously issued $2.50 par value common shares of the Bank were exchanged for 2,633,310 shares of the $.01 par value common shares of the Holding Company. The Holding Company's acquisition of the Bank has been accounted for as a combination of entities under common control at historical cost, similar to a pooling of interests and, accordingly, the financial data for all periods presented include the results of the Bank.
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 June 30, 2004, and the results of operations for the three- and six-month periods ended June 30, 2004 and 2003, and cash flows for the six-months periods ended June 30, 2004 and 2003. The results of operations for the three and six months ended June 30, 2004, 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------- -------------
2004 2003 2004 2003
---- ---- ---- ----
Balance at beginning of period $522 323 492 288
Provision for loan losses 25 48 55 83
---- ---- ---- ----
Balance at end of period $547 371 547 371
==== ==== ==== ====
|
The Bank had no impaired loans, nonaccrual loans or loans which were over ninety days past due but still accruing interest in 2004 or 2003.
(continued)
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
(3) REGULATORY CAPITAL. The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at June 30, 2004 of the regulatory capital requirements and the Bank's capital on a percentage basis:
PERCENTAGE
OF REGULATORY
THE BANK REQUIREMENT
-------- -----------
Tier I capital to total average assets 11.08% 4.00%
Tier I capital to risk-weighted assets 16.15% 4.00%
Total capital to risk-weighted assets 16.70% 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
----------------------- -----------------------
2004 2003 2004 2003
--------- --------- --------- ---------
Weighted average number of common shares
outstanding used to calculate basic
earnings per common share 2,633,020 2,612,821 2,626,988 2,605,880
Effect of dilutive stock options 75,207 67,791 65,072 57,132
--------- --------- --------- ---------
Weighted average number of common shares
outstanding used to calculate diluted earnings
per common share 2,708,227 2,680,612 2,692,060 2,663,012
========= ========= ========= =========
|
(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.
(continued)
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED), CONTINUED
(5) STOCK OPTIONS, CONTINUED. 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, 2003 287,000 $ 5.00-8.20 $ 5.72 $ 1,643
Granted 124,500 10.00 10.00 1,245
Exercised (19,734) 5.00-6.75 5.21 (103)
Forfeited (2,000) 8.20 8.20 (16)
-------- ------------ ---------- --------
Outstanding at June 30, 2004 389,766 $ 5.00-10.00 $ 7.10 $ 2,769
======== ============ ========== ========
|
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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------- ---------------
2004 2003 2004 2003
----- ---- ---- ------
Net earnings, as reported $ 391 181 815 352
Deduct: Total stock-based employee
compensation determined under the
fair value based method for all
awards, net of related tax effect 69 18 83 36
----- --- --- ------
Proforma net earnings $ 322 163 732 316
===== === === ======
Basic earnings per share:
As reported $ .15 .07 .31 .14
===== === === ======
Proforma $ .12 .06 .28 .12
===== === === ======
Diluted earnings per share:
As reported $ .14 .07 .30 .13
===== === === ======
Proforma $ .12 .06 .27 .12
===== === === ======
|
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 June 30, 2004, and for the three- and six-month periods ended June 30, 2004 and 2003, 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.
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 June 30, 2004, and the condensed consolidated statements of earnings for the three- and six-month periods ended June 30, 2004 and 2003 and the related condensed consolidated statements of stockholders' equity and cash flows for the six-month periods ended June 30, 2004 and 2003. 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, 2003, 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 January 31, 2004, 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, 2003, 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
July 23, 2004
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF JUNE 30, 2004 AND DECEMBER 31, 2003
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of cash during the six months ended June 30, 2004 were from net deposit inflows of approximately $8.6 million, proceeds from Federal Home Loan Bank advances totaling $9.7 million and principal repayments of securities held to maturity of approximately $1.7 million. Cash was used primarily to purchase securities held to maturity of approximately $5.0 million and to originate loans, net of principal repayments, totaling $5.1 million. At June 30, 2004, the Company had time deposits of $40.1 million that mature in one year or less. At June 30, 2004, 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:
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30,
2004 2003 2003
-------------- ----------- -----------
Average equity as a percentage
of average assets 10.58% 13.62% 16.47%
Equity to total assets at end of period 10.29% 11.02% 13.64%
Return on average assets (1) 1.15% .95% .83%
Return on average equity (1) 10.89% 6.99% 5.01%
Noninterest expenses to average assets (1) 1.97% 2.03% 2.22%
Nonperforming loans to total assets at end
of period -- -- --
|
(1) Annualized for the six months ended June 30, 2004 and 2003.
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 condensed consolidated balance sheet. The contract 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. Because some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer's credit worthiness 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 counterparty.
Commitments to extend credit typically result in loans with a market interest rate when funded. A summary of the amounts of the Company's financial instruments with off-balance sheet risk at June 30, 2004, follows (in thousands):
CONTRACT
AMOUNT
------
Commitments to extend credit $ 10,690
========
Undisbursed loans in process $ 862
========
|
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 2004.
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 income from interest-earning assets and
the resultant average yield; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average cost; (iii) net interest
income; (iv) rate differential; (v) net interest margin; and (vi) ratio of
average interest-earning assets to average interest-bearing liabilities. Average
balances are based on average daily balances (dollars in thousands):
THREE MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
2004 2003
------------------------------------- -------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ---- ------- --------- ----
Interest-earning assets:
Loans $ 113,449 1,880 6.63% $ 77,897 1,386 7.12%
Securities 16,191 185 4.57 6,996 56 3.20
Other interest-earning assets (1) 8,616 29 1.35 4,411 20 1.81
--------- ------- --------- ------
Total interest-earning assets/interest income 138,256 2,094 6.07 89,304 1,462 6.55
------- ------
Cash and due from banks 451 258
Premise and equipment 1,967 664
Other assets 2,059 1,658
--------- ---------
Total assets $ 142,733 $ 91,884
========= =========
Interest-bearing liabilities:
Savings, NOW and money-market deposits 8,880 27 1.22 6,278 22 1.40
Time deposits 79,840 652 3.27 53,622 518 3.86
Borrowings (2) 35,728 264 2.96 16,516 145 3.51
--------- ------- --------- ------
Total interest-bearing liabilities/
interest expense 124,448 943 3.03 76,416 685 3.59
------- ------
Noninterest-bearing demand deposits 1,214 731
Other liabilities 2,072 598
Stockholders' equity 14,999 14,139
--------- ---------
Total liabilities and stockholders' equity $ 142,733 $ 91,884
========= =========
Net interest income $ 1,151 $ 777
======= ======
Rate differential (3) 3.04% 2.96%
==== ====
Net interest margin (4) 3.33% 3.48%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.11 1.17
==== ====
|
(1) Includes interest-earning deposits with banks, Federal funds sold, and Federal Home Loan Bank stock dividends.
(2) Includes Federal Home Loan Bank advances and securities sold under agreements to repurchase.
(3) Rate differential represents the difference between the 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.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income from interest-earning assets and
the resultant average yield; (ii) the total dollar amount of interest expense on
interest-bearing liabilities and the resultant average cost; (iii) net interest
income; (iv) rate differential; (v) net interest margin; and (vi) ratio of
average interest-earning assets to average interest-bearing liabilities. Average
balances are based on average daily balances (dollars in thousands):
SIX MONTHS ENDED JUNE 30,
-------------------------------------------------------------------------
2004 2003
------------------------------------- -------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE AND YIELD/ AVERAGE AND YIELD/
BALANCE DIVIDENDS RATE BALANCE DIVIDENDS RATE
------- --------- ---- ------- --------- ----
Interest-earning assets:
Loans $ 114,047 3,812 6.68% $ 71,813 2,586 7.20%
Securities 16,380 379 4.63 6,583 114 3.46
Other interest-earning assets (1) 6,157 50 1.62 4,632 40 1.73
--------- ------- -------- ------
Total interest-earning assets/interest income 136,584 4,241 6.21 83,028 2,740 6.60
------- ------
Cash and due from banks 513 297
Premise and equipment 1,959 653
Other assets 2,392 1,351
--------- --------
Total assets $ 141,448 $ 85,329
========= ========
Interest-bearing liabilities:
Savings, NOW and money-market deposits 8,293 55 1.33 6,019 43 1.43
Time deposits 78,907 1,307 3.31 49,828 976 3.92
Borrowings (2) 36,411 532 2.92 14,248 255 3.58
--------- ------- -------- ------
Total interest-bearing liabilities/
interest expense 123,611 1,894 3.06 70,095 1,274 3.64
------- ------
Noninterest-bearing demand deposits 983 623
Other liabilities 1,880 559
Stockholders' equity 14,974 14,052
--------- --------
Total liabilities and stockholders' equity $ 141,448 $ 85,329
========= ========
Net interest income $ 2,347 $1,466
======= ======
Rate differential (3) 3.15% 2.96%
==== ====
Net interest margin (4) 3.44% 3.53%
==== ====
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.10 1.18
==== ====
|
(1) Includes interest-earning deposits with banks, Federal funds sold, and Federal Home Loan Bank stock dividends.
(2) Includes Federal Home Loan Bank advances and securities sold under agreements to repurchase.
(3) Rate differential represents the difference between the 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.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
COMPARISON OF THE THREE-MONTH PERIODS ENDED JUNE 30, 2004 AND 2003
GENERAL. Net earnings for the three months ended June 30, 2004, were $391,000 or $.15 per basic and $.14 per diluted share compared to net earnings of $181,000 or $.07 per basic and diluted share for the period ended June 30, 2003. This increase in the Company's net earnings was primarily due to an increase in net interest income and noninterest income which was partially offset by an increase in noninterest expenses, all of which were due to the overall growth of the Company.
INTEREST INCOME. Interest income increased to $2.1 million for the three months ended June 30, 2004 from $1.5 million for the three months ended June 30, 2003. Interest income on loans increased to $1.9 million due primarily to an increase in the average loan portfolio balance for the three months ended June 30, 2004, partially offset by a decrease in the average yield earned from 7.12% for the three months ended June 30, 2003 to 6.63% for the three months ended June 30, 2004. Interest on securities increased to $185,000 due primarily to an increase in the average balance and an increase in the average yield earned on the securities portfolio in 2004.
INTEREST EXPENSE. Interest expense on deposit accounts increased to $679,000 for the three months ended June 30, 2004, from $540,000 for the three months ended June 30, 2003. Interest expense increased primarily because of an increase in the average balance of deposits during 2004, partially offset by a decrease in the average rate paid on deposits during 2004. Interest expense on borrowings increased to $264,000 for the three months ended June 30, 2004 from $145,000 for the three months ended June 30, 2003 due to an increase in the average balance of borrowings, partially offset by a decrease in the average rate paid on borrowings during 2004.
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 June 30, 2004, was $25,000 compared to $48,000 for the same period in 2003. Management believes the balance in the allowance for loan losses of $547,000 at June 30, 2004, is adequate.
NONINTEREST INCOME. Total noninterest income increased to $196,000 for the three months ended June 30, 2004, from $70,000 for the three months ended June 30, 2003, primarily due to an increase in prepayment fees collected of $117,000.
NONINTEREST EXPENSES. Total noninterest expenses increased to $690,000 for the three months ended June 30, 2004 from $506,000 for the three months ended June 30, 2003, primarily due to an increase in salaries and employee benefits of $112,000, an increase in occupancy and equipment of $29,000, and an increase in professional fees of $12,000 all due to the continued growth of the Company.
INCOME TAXES. Income taxes for the three months ended June 30, 2004, were $241,000 (an effective rate of 38.1%) compared to income taxes of $112,000 (an effective rate of 38.2%) for the three months ended June 30, 2003.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
COMPARISON OF THE SIX-MONTH PERIODS ENDED JUNE 30, 2004 AND 2003
GENERAL. Net earnings for the six months ended June 30, 2004, were $815,000 or $.31 per basic and $.30 per diluted share compared to net earnings of $352,000 or $.14 per basic and $.13 per diluted share for the period ended June 30, 2003. This increase in the Company's net earnings was primarily due to an increase in net interest income and noninterest income which was partially offset by an increase in noninterest expenses, all of which were due to the overall growth of the Company.
INTEREST INCOME. Interest income increased to $4.2 million for the six months ended June 30, 2004 from $2.7 million for the six months ended June 30, 2003. Interest income on loans increased to $3.8 million due primarily to an increase in the average loan portfolio balance for the six months ended June 30, 2004, partially offset by a decrease in the average yield earned from 7.20% for the six months ended June 30, 2003 to 6.68% for the six months ended June 30, 2004. Interest on securities increased to $379,000 due primarily to an increase in the average balance and an increase in the average yield earned on the securities portfolio in 2004.
INTEREST EXPENSE. Interest expense on deposit accounts increased to $1.4 million for the six months ended June 30, 2004, from $1.0 million for the six months ended June 30, 2003. Interest expense increased primarily because of an increase in the average balance of deposits during 2004, partially offset by a decrease in the average rate paid on deposits during 2004. Interest expense on borrowings increased to $532,000 for the six months ended June 30, 2004 from $255,000 for the six months ended June 30, 2003 due to an increase in the average balance of borrowings, partially offset by a decrease in the average rate paid on borrowings during 2004.
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 six months ended June 30, 2004, was $55,000 compared to $83,000 for the same period in 2003. Management believes the balance in the allowance for loan losses of $547,000 at June 30, 2004, is adequate.
NONINTEREST INCOME. Total noninterest income increased to $417,000 for the six months ended June 30, 2004, from $134,000 for the six months ended June 30, 2003, primarily due to an increase in prepayment fees collected of $256,000.
NONINTEREST EXPENSES. Total noninterest expenses increased to $1.4 million for the six months ended June 30, 2004 from $948,000 for the six months ended June 30, 2003, primarily due to an increase in salaries and employee benefits of $269,000, an increase in occupancy and equipment of $78,000, an increase in professional fees of $27,000, and an increase in other expenses of $42,000 all due to the continued growth of the Company.
INCOME TAXES. Income taxes for the six months ended June 30, 2004, were $502,000 (an effective rate of 38.1%) compared to income taxes of $217,000 (an effective rate of 38.1%) for the six months ended June 30, 2003.
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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Shareholders (the "Annual Meeting") of the Bank was held on April 29, 2004 to approve the agreement and plan of reorganization between the Bank and the Company under which the Bank would become a wholly-owned subsidiary of the Company, and the Bank's shareholders would become Company shareholders, to consider the reelection of all existing directors each for a term of one year and to approve the amendment to the stock option plan to increase the numbers of common shares available under the plan.
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS, CONTINUED
At the Annual Meeting, 2,234,348 shares were present in person or by proxy. The following is a summary and tabulation of the matters that were voted upon at the Annual Meeting:
Proposal I
The approval of the agreement and plan of reorganization dated March 23, 2004 between OptimumBank and OptimumBank Holdings, Inc., as set forth in the notice to stockholders is as follows:
FOR WITHHELD AGAINST --- -------- ------- 1,669,925 564,423 - ========= ======= ========= |
Proposal II
The reelection of all existing directors each for a term of one year is as follows:
FOR WITHHELD AGAINST
--- -------- -------
Albert J. Finch 2,234,348 - -
========= ============ ============
Richard L. Browdy 2,234,348 - -
========= ============ ============
Michael Bedzow 2,234,348 - -
========= ============ ============
Sam Borek 2,234,348 - -
========= ============ ============
Irving P. Cohen 2,234,348 - -
========= ============ ============
Gordon Deckelbaum 2,234,348 - -
========= ============ ============
Paul B. Fay, Jr. 2,234,348 - -
========= ============ ============
Summer G. Kaye 2,234,348 - -
========= ============ ============
H. David Krinsky 2,234,348 - -
========= ============ ============
Stephen Markowitz 2,234,348 - -
========= ============ ============
Larry R. Willis 2,234,348 - -
========= ============ ============
|
Proposal III
The approval of the amendment to the stock option plan to increase the number of common shares available under the plan is as follows:
FOR WITHHELD AGAINST --- -------- ------- 1,634,521 599,827 - ========= ======= ============= |
OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY
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. The exhibits denominated by a double asterisk (**) were previously filed as a part of a current report on Form 8-K filed with the Securities and Exchange Commission on May 11, 2004.
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 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
|
(b) REPORTS ON FORM 8-K. During the second quarter, the Company filed a report on Form 8-K dated April 21, 2004 reporting the press release covering the results for the first quarter of 2004.
On May 10, 2004 the Company filed a report on Form 8-K as the initial report of the Company to the Securities Exchange Commission and as a notice that the Company was the successor issuer to the Bank under Rule 12g-3 of the Securities Exchange Act of 1934.
On May 11, 2004 the Company filed a report on Form 8-K announcing the reorganization of the Company as a bank holding company for the Bank.
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: August 10, 2004 By: /s/Albert J. Finch
------------------ ---------------------------------------------
Albert J. Finch, Chief Executive Officer
|
EXHIBIT 4.1
NUMBER SHARES
OBH
OptimumBank Holdings, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF FLORIDA
SEE REVERSE FOR
CERTAIN DEFINITIONS
CUSIP 68401P 10 6
COMMON STOCK
THIS CERTIFIES THAT:
IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK
OF ONE CENT ($.01) PAR VALUE EACH OF
OPTIMUMBANK HOLDINGS, INC.
transferable on the books of the Corporation in person or by attorney upon surrender of this certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
COUNTERSIGNED:
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
DATED: JERSEY CITY, NJ
TRANSFER AGENT AND REGISTRAR
BY:
AUTHORIZED OFFICER
/s/ Albert J. Finch /s/ Richard L. Browdy
|
CHAIRMAN OF THE BOARD, CEO PRESIDENT
OPTIMUMBANK HOLDINGS, INC.
COMMON STOCK
The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT -.....Custodian..... TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act............... in common (State) |
Additional abbreviations may also be used though not in the above list.
For Value Received, ______________________ hereby sell, assign and transfer unto
_________________________________________________________________________ Shares of the stock represented by the within Certificate, and do hereby irrevocably constitute and appoint
_______________________________________________________________________ Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises.
Dated ______________ _______________________________________________
_______________________________________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT
MUST CORRESPOND WITH THE NAME AS WRITTEN UPON
THE FACE OF THE CERTIFICATE IN EVERY
PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATSOVER.
|
The shares represented by this Certificate are issued subject to all the provisions of the Articles of Incorporation and the Bylaws, as from time to time amended (copies of which are on file at the main office of the Corporation) to all of which the holder, by acceptance hereof, assents.
The Corporation will furnish to any shareholder upon request and without charge a full statement of the designations, relative rights, preferences and limitations of the shares of each class or series of stock authorized to be issued by the Corporation.
Exhibit 31.1
CERTIFICATIONS
I, Albert J. Finch, certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of OptimumBank Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: August 10, 2004 By: /s/ Albert J. Finch
----------------------------------------
Albert J. Finch, Chief Executive Officer
|
Exhibit 31.2
I, Richard L. Browdy, certify, that:
1. I have reviewed this quarterly report on Form 10-QSB of OptimumBank Holdings, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
Date: August 10, 2004 By: /s/ Richard L. Browdy
------------------------------------------
Richard L. Browdy, Chief Financial Officer
|
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Albert J. Finch, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.ss. 1350, as added by ss. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.
Date: August 10, 2004 By: /s/ Albert J. Finch
----------------------------------------
Albert J. Finch, Chief Executive Officer
|
Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADDED BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the "Company") on Form 10-QSB for the period ended June 30, 2004 as filed with the Securities and Exchange Commission (the "Report"), I, Richard L. Browdy, Chief Financial Officer (Principal Accounting Officer) of the Company, certify, pursuant to 18 U.S.C.ss. 1350, as added by ss. 906 of the Sarbanes-Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the report.
Date: August 10, 2004 By: /s/ Richard L. Browdy
------------------------------------------
Richard L. Browdy, Chief Financial Officer
|