OPHC

• Leadership and Corporate Structure Updates

  • Completed a planned executive leadership transition: long-serving chairman Moishe Gubin added the role of Chief Executive Officer, and veteran banking executive Braden Smith joined as President, maintaining strategic continuity while positioning the firm for the next growth phase.
  • Completed a capital structure simplification: all outstanding Series B and Series C convertible preferred stock were exchanged for non-voting common stock. Since the preferred shares were already included in the fully diluted share count, the transaction had minimal dilution impact and creates a simpler, more transparent capital structure for investors.

• Growth and Lending Platform Expansion

  • The newly launched Optimum Finance completed its first transactions, becoming the second specialized growth vehicle after Optimum Funding. These new platforms allow the firm to serve customer needs that do not fit traditional bank regulatory requirements or underwriting guidelines, leverage third-party capital, diversify earnings streams, and deepen existing customer relationships.
  • Total assets surpassed $1.4 billion for the first time in company history, growing at a 28%+ compound annual growth rate since 2022. Since December 31, 2022, gross loans have grown at a 30.19% CAGR and total deposits have grown at a 28.27% CAGR, while non-interest income has grown at a 35.68% CAGR, demonstrating the scalability of the firm's growth strategy.

• Market and Industry Recognition

  • Earned two national industry distinctions: ranked the 49th best performing community bank in the U.S. by S&P Global Market Intelligence, and named a Raymond James Community Bankers Cup recipient, placing it among the top performing publicly traded community banks.
  • Breen Capital and Alliance Global Partners initiated new research coverage with buy ratings, while CompassPoint upgraded the firm's rating from neutral to buy, expanding institutional awareness of Optimum Bank's performance and strategy.

• Credit and Capital Strength

  • Credit quality remained exceptionally strong: non-performing assets represented just 0.22% of total assets, net charge-offs were 0% of average loans, and the allowance for credit losses stood at 0.91% of total loans at quarter end. A reversal of $37,000 in credit loss expense was recorded in the quarter, reflecting portfolio strength. The tier one leverage ratio was 10.54%, placing the bank well above regulatory capital requirements.

• Management increased annual forward-looking diluted EPS guidance to a range of $1.00 to $1.15, based on the Q2 2026 quarterly run rate of approximately $0.28 per diluted share, which management expects to be sustainably replicated going forward. The wide range accounts for potential future equity raises to support continued balance sheet growth, as the exact impact of new share issuance on fully diluted EPS has not been finalized.
• Management expects net interest margin to continue expanding modestly from the current Q2 2026 level of 4.57%, driven by continued loan growth: maturing loans paid off at rates below 5% are replaced with new loans originated at rates above 7%, which progressively improves net interest income over time.
• Management expects the allowance for credit losses as a percentage of loans to increase modestly over the second half of 2026, rising from the current 0.91% to closer to 1%, due to expected increases in qualitative and concentration-based reserve factors.
• Optimum Finance is expected to report GAAP profitability in the third quarter 2026, after minimal initial start-up and accounting related expenses in the second quarter.

Optimum Bank Holdings operates as a single consolidated commercial and community banking segment with the additional newly launched Optimum Finance lending platform. For the second quarter of 2026, the consolidated bank segment reported: net interest income of $14.7 million, representing a $1.5 million increase from Q1 2026 and $4.5 million increase from Q2 2025; non-interest income of $2.49 million, with service charges and fee income driving growth; pre-tax income of $8.84 million, up $2.64 million from Q1 2026; and net income of $6.66 million, a 43% increase quarter-over-quarter and 85% increase year-over-year. As of quarter end, the bank had $1.4 billion in total assets, $1.22 billion in gross loans, and $1.21 billion in total deposits. The new Optimum Finance segment had an originated loan portfolio of $24.1 million at quarter end, with an average portfolio yield of 18-18.5%, compared to its current funding cost of 10%, resulting in a positive net spread that is expected to deliver profitability in the third quarter 2026. No separate revenue contribution percentages are provided for the new platform at this time, as it remains in early stages of operation.

• Optimum Finance involves operational growing pains, as the existing internal team has deep experience in traditional bank lending processes but must adapt to the different requirements of non-bank finance lending. However, management emphasizes that while Optimum Finance loans do not fit traditional bank policy guidelines, they are not high risk in terms of common sense underwriting, with low loan-to-value ratios, full borrower recourse, and existing relationships with known, creditworthy borrowers.
• Future equity dilution is a potential factor, as management plans to raise additional equity to support the very strong current loan pipeline, which will increase the share count and impact fully diluted EPS within the current guidance range. Management's ATM program is also being used opportunistically to increase share liquidity for institutional investors, which adds incremental share supply over time.
• Management maintains formal concentration limits for loan segments, but will approve creditworthy, appropriately priced loans even if they push against existing concentration limits, which could lead to higher segment concentration than peer banks if strong demand continues in existing lending verticals.

Q: The $1 to $1.15 annual EPS guidance — is this for full year 2026, or a forward run rate? What drove the upside surprise to Q2's 28 cent diluted EPS compared to prior Q1 guidance of 18 to 21 cents? / A: The guidance reflects a sustainable annual run rate based on Q2's $0.28 per diluted share, which management expects to be replicated going forward. The upside came from stable non-interest expenses quarter-over-quarter in 2026, with no material planned future payroll increases, while net interest income continues to grow as lower-yielding maturing loans are replaced with new higher-yielding loans above 7%, steadily improving profitability. All components of the $0.28 per share are recurring, with no non-recurring items.

Q: What is the strategic purpose of Optimum Finance, and why can't these loans be originated through the bank? What is its current activity and expected growth? / A: Optimum Finance was created to meet existing customer borrowing needs that do not fit traditional bank policy or regulatory requirements, such as short-term second mortgages or loans with unusual documentation constraints. It allows Optimum to retain customer relationships rather than sending them to outside lenders, and it generates much higher yields than traditional bank lending. To date, 4 short-term CRE loans have been originated totaling $24.1 million, with an average yield over 18% and a 8%+ spread after 10% funding costs. Management expects the platform could eventually outgrow the core bank in size and earnings over 5-10 years, and it can also create future loan pipeline for the core bank as loans stabilize.

Q: If you raise additional capital, will it primarily support core bank growth or Optimum Finance growth? Why are you using the ATM program opportunistically? / A: The core bank remains the primary growth engine, so all new capital will first support the core bank's very strong $700 million+ pipeline of clean, traditional customer loans. The ATM program is primarily used to increase share liquidity and allow larger institutional investors to take positions up to the 4.9% regulatory threshold, which will improve trading liquidity and support a higher valuation closer to peer group levels. Incremental capital from the ATM is a secondary benefit that reduces future capital needs.

Q: What is driving Optimum Bank's strong recent deposit growth, and are you paying higher rates to attract deposits? How do you approach loan concentration risk? / A: Deposit growth is driven by deepening existing customer relationships and expanding treasury services to attract new commercial relationships, with strict discipline on deposit pricing — the firm does not chase deposits with above-market rates. For loan concentrations, the firm maintains formal risk limits at the board level but will approve any well-underwritten, low LTV, high-yield loan that meets criteria regardless of concentration. The firm declines low-yielding commercial loans that do not meet internal pricing requirements, even if they would help diversify the portfolio. All core bank loans have full personal recourse, typically from guarantors with net worth 3-10x the loan size, which supports the very strong credit quality.