x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Florida
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55-0865043
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(State or other jurisdiction of incorporation or organization)
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(IRS Employer Identification No.)
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Large accelerated filer ¨ | Accelerated filer o | |
Non-accelerated filer o | (Do not check if a smaller reporting company) | Smaller reporting company x |
Page | |
PART I. FINANCIAL INFORMATION | |
2 | |
3 | |
4 | |
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5 | |
6-7 | |
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8-24 | |
25-31 | |
32 | |
32 | |
32 | |
33 |
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March 31, 2013
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December 31, 2012
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||||||
(Unaudited)
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||||||||
Assets | ||||||||
Cash and due from banks
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$ | 3,929 | $ | 4,541 | ||||
Interest-bearing deposits with banks
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12,012 | 19,070 | ||||||
Total cash and cash equivalents
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15,941 | 23,611 | ||||||
Securities available for sale
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16,920 | 18,648 | ||||||
Loans, net of allowance for loan losses of $2,540 and $2,459
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86,074 | 85,209 | ||||||
Federal Home Loan Bank stock
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1,419 | 1,478 | ||||||
Premises and equipment, net
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2,941 | 2,906 | ||||||
Foreclosed real estate, net
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11,452 | 10,938 | ||||||
Accrued interest receivable
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500 | 499 | ||||||
Other assets
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355 | 454 | ||||||
Total assets
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$ | 135,602 | $ | 143,743 | ||||
Liabilities and Stockholders’ Equity
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||||||||
Liabilities: | ||||||||
Noninterest-bearing demand deposits
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2,402 | 4,626 | ||||||
Savings, NOW and money-market deposits
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33,172 | 34,153 | ||||||
Time deposits
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60,309 | 62,832 | ||||||
Total deposits
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95,883 | 101,611 | ||||||
Federal Home Loan Bank advances
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27,700 | 27,700 | ||||||
Junior subordinated debenture
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5,155 | 5,155 | ||||||
Advanced payment by borrowers for taxes and insurance
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611 | 461 | ||||||
Official checks
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290 | 581 | ||||||
Other liabilities
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1,232 | 1,325 | ||||||
Total liabilities
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130,871 | 136,833 | ||||||
Stockholders’ equity:
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||||||||
Preferred stock, no par value; 6,000,000 shares authorized, no shares issued or outstanding
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0 | 0 | ||||||
Common stock, $.01 par value; 50,000,000 shares authorized 31,530,109 and 31,511,201 shares issued and outstanding
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315 | 315 | ||||||
Additional paid-in capital
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31,066 | 31,057 | ||||||
Accumulated deficit
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(26,845 | ) | (24,688 | ) | ||||
Accumulated other comprehensive income
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195 | 226 | ||||||
Total stockholders’ equity
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4,731 | 6,910 | ||||||
Total liabilities and stockholders’ equity
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$ | 135,602 | $ | 143,743 |
Three Months Ended
March 31,
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||||||||
2013
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2012
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|||||||
Interest income: | ||||||||
Loans
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$ | 1,093 | $ | 995 | ||||
Securities
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192 | 298 | ||||||
Other
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16 | 16 | ||||||
Total interest income
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1,301 | 1,309 | ||||||
Interest expense:
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||||||||
Deposits
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229 | 291 | ||||||
Borrowings
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335 | 389 | ||||||
Total interest expense
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564 | 680 | ||||||
Net interest income
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737 | 629 | ||||||
Provision for loan losses
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1,372 | 27 | ||||||
Net interest (expense) income after provision for loan losses
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(635 | ) | 602 | |||||
Noninterest income:
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||||||||
Service charges and fees
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34 | 3 | ||||||
Other
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12 | 1 | ||||||
Total noninterest income
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46 | 4 | ||||||
Noninterest expenses: | ||||||||
Salaries and employee benefits
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488 | 410 | ||||||
Professional fees
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168 | 239 | ||||||
Occupancy and equipment
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136 | 119 | ||||||
Data processing
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72 | 50 | ||||||
Insurance
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78 | 70 | ||||||
Foreclosed real estate expenses
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285 | 68 | ||||||
Regulatory assessment
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88 | 44 | ||||||
Other
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49 | 188 | ||||||
Total noninterest expenses
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1,364 | 1,188 | ||||||
Other-than-temporary impairment on securities:
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||||||||
Total other-than-temporary impairment losses
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204 | 0 | ||||||
Portion of losses recognized in other comprehensive income
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0 | 0 | ||||||
Net loss
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$ | (2,157 | ) | $ | (582 | ) | ||
Net loss per share:
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||||||||
Basic
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$ | (.07 | ) | $ | (.03 | ) | ||
Diluted
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$ | (.07 | ) | $ | (.03 | ) | ||
Dividends per share
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$ | 0 | $ | 0 |
Three Months Ended
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||||||||
March 31,
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||||||||
2013
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2012
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|||||||
Net loss
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$ | (2,157 | ) | $ | (582 | ) | ||
Other comprehensive loss-
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||||||||
Unrealized gains on securities available for sale:
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||||||||
Unrealized gain arising during the period
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173 | 327 | ||||||
Other than temporary impairment on securities
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204 | — | ||||||
Unrealized holding (loss) gain arising during period
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(31 | ) | 327 | |||||
Comprehensive loss
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$ | (2,188 | ) | $ | (255 | ) |
Common Stock
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Additional Paid-In
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Accumulated
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Accumulated Other Comprehensive (Loss)
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Total Stockholders’
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||||||||||||||||||||
Shares
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Amount
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Capital
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Deficit
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Income
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Equity
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|||||||||||||||||||
Balance at December 31, 2011
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22,411,108 | $ | 224 | $ | 27,491 | $ | (19,991 | ) | $ | (938 | ) | $ | 6,786 | |||||||||||
Net loss for the three months ended March 31, 2012 (unaudited)
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0 | 0 | 0 | (582 | ) | 0 | (582 | ) | ||||||||||||||||
Net change in unrealized loss on securities available for sale (unaudited)
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0 | 0 | 0 | 0 | 327 | 327 | ||||||||||||||||||
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||||||||||||||||||||||||
Proceeds from sale of common stock (unaudited)
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4,076,289 | 41 | 1,602 | 0 | 0 | 1,643 | ||||||||||||||||||
Balance at March 31, 2012 (unaudited)
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26,487,397 | $ | 265 | $ | 29,093 | $ | (20,573 | ) | $ | (611 | ) | $ | 8,174 | |||||||||||
Balance at December 31, 2012
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31,511,201 | $ | 315 | $ | 31,057 | $ | (24,688 | ) | $ | 226 | $ | 6,910 | ||||||||||||
Net loss for the three months ended March 31, 2013 (unaudited)
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0 | 0 | 0 | (2,157 | ) | 0 | (2,157 | ) | ||||||||||||||||
Net change in unrealized loss on securities available for sale (unaudited)
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0 | 0 | 0 | 0 | (31 | ) | (31 | ) | ||||||||||||||||
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||||||||||||||||||||||||
Issuance of common stock as compensation (unaudited)
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18,908 | 0 | 9 | 0 | 0 | 9 | ||||||||||||||||||
Balance at March 31, 2013 (unaudited)
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31,530,109 | $ | 315 | $ | 31,066 | $ | (26,845 | ) | $ | 195 | $ | 4,731 |
Three Months Ended
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||||||||
March 31,
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||||||||
2013
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2012
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Cash flows from operating activities:
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||||||||
Net loss
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$ | (2,157 | ) | $ | (582 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities:
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||||||||
Depreciation and amortization
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47 | 26 | ||||||
Provision for loan losses
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1,372 | 27 | ||||||
Net amortization of fees, premiums and discounts
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9 | 9 | ||||||
Provision for losses on foreclosed real estate
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183 | 25 | ||||||
Common stock issued as compensation
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9 | — | ||||||
(Increase) decrease in accrued interest receivable
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(1 | ) | 4 | |||||
Decrease (increase) in other assets
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99 | (100 | ) | |||||
Decrease in official checks and other liabilities
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(384 | ) | (502 | ) | ||||
Other-than-temporary impairment losses
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204 | 0 | ||||||
Net cash used in operating activities
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(619 | ) | (1,093 | ) | ||||
Cash flows from investing activities:
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||||||||
Principal repayments and calls of securities
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1,487 | 2,286 | ||||||
Net (increase) decrease in loans
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(2,937 | ) | 929 | |||||
Purchases of premises and equipment
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(82 | ) | (8 | ) | ||||
Capital improvements on foreclosed real estate
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0 | (22 | ) | |||||
Redemption FHLB stock
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59 | 0 | ||||||
Net cash (used in) provided by investing activities
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(1,473 | ) | 3,185 | |||||
Cash flows from financing activities:
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||||||||
Net decrease in deposits
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(5,728 | ) | (2,362 | ) | ||||
Net increase (decrease) in advanced payments by borrowers for taxes and insurance
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150 | (58 | ) | |||||
Proceeds from sale of common stock
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0 | 1,643 | ||||||
Net cash used in financing activities
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(5,578 | ) | (777 | ) | ||||
Net (decrease) increase in cash and cash equivalents
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(7,670 | ) | 1,315 | |||||
Cash and cash equivalents at beginning of the period
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23,611 | 22,776 | ||||||
Cash and cash equivalents at end of the period
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$ | 15,941 | $ | 24,091 |
Three Months Ended
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March 31,
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||||||||
2013
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2012
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|||||||
Supplemental disclosure of cash flow information:
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||||||||
Cash paid during the period for:
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||||||||
Interest
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$ | 525 | $ | 640 | ||||
Income taxes
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$ | 0 | $ | 0 | ||||
Noncash transactions:
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||||||||
Change in accumulated other comprehensive loss, net change in unrealized gain on securities available for sale
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$ | (31 | ) | $ | 327 | |||
Loans transferred to foreclosed real estate
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$ | 697 | $ | 0 |
(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. The Bank’s wholly-owned subsidiaries are OB Real Estate Management, LLC, OB Real Estate Holdings, LLC and OB Real Estate Holding 1503, LLC, all of which were formed in 2009, OB Real Estate Holdings 1695, OB Real Estate Holdings 1669, OB Real Estate Holdings 1645, OB Real Estate Holdings 1620 and OB Real Estate Holdings 1565, all formed in 2010; OB Real Estate Holdings 1443 and OB Real Estate Holdings Northwood, OB Real Estate Holdings 1596, OB Real Estate Holdings 1636 formed in 2011; and OB Real Estate Holdings 1655, OB Real Estate Holdings 1692, OB Real Estate Holdings 1704, OB Real Estate Holdings Rosemary and OB Real Estate Holdings Sillato formed in 2012 (the “Real Estate Holding Subsidiaries”). The Holding Company’s only business is the operation of the Bank and its subsidiaries (collectively, the “Company”). The Bank’s deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation (“FDIC”). The Bank offers a variety of commercial banking services to individual and corporate customers through its three banking offices located in Broward County, Florida. OB Real Estate Management, LLC is primarily engaged in managing foreclosed real estate. This subsidiary had no activity in 2012 and 2011. All other subsidiaries are primarily engaged in holding and disposing of foreclosed real estate.
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In the opinion of 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, 2013, and the results of operations and cash flows for the three-month periods ended March 31, 2013 and 2012. The results of operations for the three months ended March 31, 2013, are not necessarily indicative of the results to be expected for the full year.
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Comprehensive Loss. Generally accepted accounting principles generally requires that recognized revenue, expenses, gains and losses be included in net loss. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, such items along with net loss, are components of comprehensive loss. The only component of other comprehensive loss is the net change in the unrealized loss on the securities available for sale.
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Income Taxes. During the year ended December 31, 2009, the Company assessed its earnings history and trend over the past year and its estimate of future earnings, and determined that it is more likely than not that the deferred tax asset will not be realized in the near term. Accordingly, a valuation allowance was recorded against the net deferred tax asset for the amount not expected to be realized in the future. Based on the available evidence at March 31, 2013, the Company determined that it is still more likely than not that the deferred tax asset will not be realized in the near term.
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(1) |
General, Continued.
Recent Pronouncements. In January 2013, the FASB issued Accounting Standards Update No. 2013-01 (“ASU 2013-01”), Balance Sheet (Topic 210), Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. ASU 2013-01 clarifies that the scope of Update 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. ASU 2013-01 is effective for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.
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In February 2013, the FASB issued Accounting Standards Update 2013-2 (“ASU 2013-2”), Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220). ASU 2013-2 requires an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The Company adopted the standard in January 2013 and it did not have a significant impact on the Company’s consolidated financial statements.
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(2) |
Securities. Securities have been classified according to management’s intent. The carrying amount of securities and approximate fair values are as follows (in thousands):
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Gross
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Gross
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|||||||||||||||
Amortized
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Unrealized
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Unrealized
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Fair
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|||||||||||||
Cost
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Gains
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Losses
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Value
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At March 31, 2013:
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||||||||||||||||
Securities Available for Sale-
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||||||||||||||||
Mortgage-backed securities
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$ | 16,725 | $ | 325 | $ | (130 | ) | $ | 16,920 | |||||||
At December 31, 2012:
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||||||||||||||||
Securities Available for Sale-
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||||||||||||||||
Mortgage-backed securities
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$ | 18,422 | $ | 305 | $ | (79 | ) | $ | 18,648 |
In June 2011, the Company transferred securities with a book value of approximately $50.5 million from the held to maturity category to the available for sale category. The fair value of the securities was $49.8 million resulting in unrealized losses of approximately $0.7 million. The net unrealized loss was recorded in accumulated other comprehensive income. Due to this transfer, the Company will be prohibited from classifying securities as held to maturity for a period of two years.
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Securities with gross unrealized losses at March 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows (in thousands):
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Less Than Twelve Months
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Over Twelve Months
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|||||||||||||||
Gross
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Gross
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|||||||||||||||
Unrealized
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Fair
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Unrealized
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Fair
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|||||||||||||
Losses
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Value
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Losses
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Value
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|||||||||||||
Securities Available for Sale-
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||||||||||||||||
Mortgage-backed securities
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$ | (68 | ) | $ | 2,194 | $ | (62 | ) | $ | 1,984 |
(2) |
Securities, Continued. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. A security is impaired if the fair value is less than its carrying value at the financial statement date. When a security is impaired, the Company determines whether this impairment is temporary or other-than-temporary. In estimating other-than-temporary impairment (“OTTI”) losses, management assesses whether it intends to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. If either of these criteria is met, the entire difference between amortized cost and fair value is recognized in operations. For securities that do not meet the aforementioned criteria, the amount of impairment recognized in operations is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive loss. Management utilizes cash flow models to segregate impairments to distinguish between impairment related to credit losses and impairment related to other factors. To assess for OTTI, management considers, among other things, (i) the severity and duration of the impairment; (ii) the ratings of the security; (iii) the overall transaction structure (the Company’s position within the structure, the aggregate, near-term financial performance of the underlying collateral, delinquencies, defaults, loss severities, recoveries, prepayments, cumulative loss projections, and discounted cash flows); and (iv) the timing and magnitude of a break in modeled cash flows.
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In evaluating mortgage-backed securities with unrealized losses greater than twelve months, management utilizes various resources, including input from independent third party firms to perform an analysis of expected future cash flows. The process begins with an assessment of the underlying collateral backing the mortgage pools. Management develops specific assumptions using as much market data as possible and includes internal estimates as well as estimates published by rating agencies and other third-party sources. The data for the individual borrowers in the underlying mortgage pools are generally segregated by state, FICO score at issue, loan to value at issue and income documentation criteria. Mortgage pools are evaluated for current and expected levels of delinquencies and foreclosures, based on where they fall in the proscribed data set of FICO score, geographics, LTV and documentation type and a level of loss severity is assigned to each security based on its experience. The above-described historical data is used to develop current and expected measures of cumulative default rates as well as ultimate loss frequency and severity within the underlying mortgages. This reveals the expected future cash flows within the mortgage pool. The data described above is then input to an industry recognized model to assess the behavior of the particular security tranche owned by the Company. Significant inputs in this process include the structure of any subordination structures, if applicable, and are dictated by the structure of each particular security as laid out in the offering documents. The forecasted cash flows from the mortgage pools are input through the security structuring model to derive expected cash flows for the specific security owned by the Company to determine if the future cash flows are expected to exceed the book value of the security. The values for the significant inputs are updated on a regular basis. During the three months ended March 31, 2013, the Company recorded other-than-temporary impairment charges totaling $204,000 which resulted in cumulative OTTI of $708,000 at March 31, 2013.
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(2) |
Securities, Continued. The unrealized losses on investment securities were caused by market conditions. It is expected that the securities would not be settled at a price less than the book value of the investments. Because the decline in fair value is attributable to market conditions and not credit quality, and because the Company has the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.
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(3) | Loans. The segments of loans are as follows (in thousands): |
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At March 31,
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At December 31,
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||||||
2013
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2012
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|||||||
Residential real estate
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$ | 29,803 | $ | 30,064 | ||||
Multi-family real estate
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3,885 | 3,916 | ||||||
Commercial real estate
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38,944 | 39,126 | ||||||
Land and construction
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7,233 | 7,276 | ||||||
Commercial
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8,604 | 7,158 | ||||||
Consumer
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107 | 70 | ||||||
Total loans
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88,576 | 87,610 | ||||||
Add (deduct):
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||||||||
Net deferred loan fees, costs and premiums
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38 | 58 | ||||||
Allowance for loan losses
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(2,540 | ) | (2,459 | ) | ||||
Loans, net
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$ | 86,074 | $ | 85,209 |
Residential Real
Estate |
Multi-Family Real
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Commercial Real
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Land and
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Commercial |
Consumer
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Total
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||||||||||||||||||||||
Three Months Ended March 31, 2013:
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||||||||||||||||||||||||||||
Beginning balance
|
$ | 434 | $ | 267 | $ | 1,372 | $ | 166 | $ | 216 | $ | 4 | $ | 2,459 | ||||||||||||||
Provision (credit) for loan losses
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32 | (224 | ) | 1,567 | (36 | ) | 40 | (7 | ) | 1,372 | ||||||||||||||||||
Charge-offs
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(97 | ) | 0 | (1,197 | ) | 0 | 0 | 0 | (1,294 | ) | ||||||||||||||||||
Recoveries
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0 | 0 | 0 | 0 | 0 | 3 | 3 | |||||||||||||||||||||
Ending balance
|
$ | 369 | $ | 43 | $ | 1,742 | $ | 130 | $ | 256 | $ | 0 | $ | 2,540 | ||||||||||||||
Individually evaluated for impairment:
|
||||||||||||||||||||||||||||
Recorded investment
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$ | 7,410 | $ | 0 | $ | 9,579 | $ | 872 | $ | 0 | $ | 0 | $ | 17,861 | ||||||||||||||
Balance in allowance for loan losses
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$ | 0 | $ | 0 | $ | 882 | $ | 17 | $ | 0 | $ | 0 | $ | 899 | ||||||||||||||
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||||||||||||||||||||||||||||
Collectively evaluated for impairment:
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||||||||||||||||||||||||||||
Recorded investment
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$ | 22,393 | $ | 3,885 | $ | 29,365 | $ | 6,361 | $ | 8,604 | $ | 107 | $ | 70,715 | ||||||||||||||
Balance in allowance for loan losses
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$ | 369 | $ | 43 | $ | 860 | $ | 113 | $ | 256 | $ | 0 | $ | 1,641 |
(3)
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Loans, Continued.
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Residential Real Estate
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Multi-Family Real Estate
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Commercial Real Estate
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Land and Construction
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Commercial | Consumer |
Total
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||||||||||||||||||||||
Three Months Ended March 31, 2012: | ||||||||||||||||||||||||||||
Beginning balance
|
$ | 549 | $ | 247 | $ | 1,190 | $ | 187 | $ | 161 | $ | 15 | $ | 2,349 | ||||||||||||||
Provision (credit) for loan losses
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112 | (33 | ) | (307 | ) | 294 | (44 | ) | 5 | 27 | ||||||||||||||||||
Charge-offs
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0 | 0 | (69 | ) | (335 | ) | 0 | 0 | (404 | ) | ||||||||||||||||||
Recoveries
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0 | 0 | 0 | 0 | 0 | 3 | 3 | |||||||||||||||||||||
Ending balance
|
$ | 661 | $ | 214 | $ | 814 | $ | 146 | $ | 117 | $ | 23 | $ | 1,975 | ||||||||||||||
Individually evaluated for impairment:
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||||||||||||||||||||||||||||
Recorded investment
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$ | 8,006 | $ | 0 | $ | 15,438 | $ | 6,877 | $ | 0 | $ | 0 | $ | 30,321 | ||||||||||||||
Balance in allowance for loan losses
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$ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||
Collectively evaluated for impairment:
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||||||||||||||||||||||||||||
Recorded investment
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$ | 21,885 | $ | 4,059 | $ | 25,587 | $ | 4,520 | $ | 3,693 | $ | 125 | $ | 59,869 | ||||||||||||||
Balance in allowance for loan losses
|
$ | 661 | $ | 214 | $ | 814 | $ | 146 | $ | 117 | $ | 23 | $ | 1,975 |
(3) |
Loans, Continued. The Company has divided the loan portfolio into six portfolio segments, each with different risk characteristics and methodologies for assessing risk. The portfolio segments identified by the Company are as follows:
Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction. Real estate mortgage loans are typically segmented into four categories: Residential real estate, Multi-family real estate, Commercial real estate, and Land and Construction. Residential real estate loans are underwritten in accordance with policies set forth and approved by the Board of Directors (the “Board”), including repayment capacity and source, value of the underlying property, credit history and stability. Multi-family real estate and commercial real estate loans are secured by the subject property and are underwritten based upon standards set forth in the policies approved by the Company’s Board. Such standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Land and construction loans to borrowers are to finance the construction of owner occupied and leased properties. These loans are categorized as construction loans during the construction period, later converting to commercial or residential real estate loans after the construction is complete and amortization of the loan begins. Real estate development and construction loans are approved based on an analysis of the borrower and guarantor, the viability of the project and on an acceptable percentage of the appraised value of the property securing the loan. Real estate development and construction loan funds are disbursed periodically based on the percentage of construction completed. The Company carefully monitors these loans with on-site inspections and requires the receipt of lien waivers on funds advanced. Development and construction loans are typically secured by the properties under development or construction, and personal guarantees are typically obtained. Further, to assure that reliance is not placed solely on the value of the underlying property, the Company considers the market conditions and feasibility of proposed projects, the financial condition and reputation of the borrower and guarantors, the amount of the borrower’s equity in the project, independent appraisals, costs estimates and pre-construction sale information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for the future development for either commercial or residential use by the borrower. The Company carefully analyzes the intended use of the property and the viability thereof.
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(3) |
Loans, Continued.
Commercial Loans. Commercial loans are primarily underwritten on the basis of the borrowers’ ability to service such debt from income. The cash flows of borrowers, however, may not be as expected and the collateral securing these loans may fluctuate in value. As a general practice, the Company takes as collateral a security interest in any available real estate, equipment, or other chattel, although loans may also be made on an unsecured basis. Collateralized working capital loans typically are secured by short-term assets whereas long-term loans are primarily secured by long-term assets. These loans are also affected by adverse economic conditions should they prevail within the Company’s local market.
Consumer Loans. Consumer loans are extended for various purposes, including purchases of automobiles, recreational vehicles, and boats. Also offered are home improvement loans, lines of credit, personal loans, and deposit account collateralized loans. Repayment of these loans is primarily dependent on the personal income of the borrowers, which can be impacted by economic conditions in their market areas such as unemployment levels. Loans to consumers are extended after a credit evaluation, including the creditworthiness of the borrower(s), the purpose of the credit, and the secondary source of repayment. Consumer loans are made at fixed and variable interest rates and may be made on terms of up to ten years. Risk is mitigated by the fact that the loans are of smaller individual amounts and spread over a large number of borrowers.
|
Pass
|
OLEM
(Other Loans |
Substandard
|
Doubtful
|
Loss
|
Total
|
|||||||||||||||||||
At March 31, 2013:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 22,393 | $ | 0 | $ | 7,410 | $ | 0 | $ | 0 | $ | 29,803 | ||||||||||||
Multi-family real estate
|
3,885 | 0 | 0 | 0 | 0 | 3,885 | ||||||||||||||||||
Commercial real estate
|
26,858 | 1,390 | 10,696 | 0 | 0 | 38,944 | ||||||||||||||||||
Land and construction
|
4,379 | 1,982 | 872 | 0 | 0 | 7,233 | ||||||||||||||||||
Commercial
|
7,544 | 995 | 65 | 0 | 0 | 8,604 | ||||||||||||||||||
Consumer
|
107 | 0 | 0 | 0 | 0 | 107 | ||||||||||||||||||
Total
|
$ | 65,166 | $ | 4,367 | $ | 19,043 | $ | 0 | $ | 0 | $ | 88,576 | ||||||||||||
At December 31, 2012:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 22,491 | $ | 0 | $ | 7,573 | $ | 0 | $ | 0 | $ | 30,064 | ||||||||||||
Multi-family real estate
|
3,916 | 0 | 0 | 0 | 0 | 3,916 | ||||||||||||||||||
Commercial real estate
|
24,967 | 2,624 | 11,535 | 0 | 0 | 39,126 | ||||||||||||||||||
Land and construction
|
4,402 | 1,987 | 887 | 0 | 0 | 7,276 | ||||||||||||||||||
Commercial
|
7,092 | 66 | 0 | 0 | 0 | 7,158 | ||||||||||||||||||
Consumer
|
70 | 0 | 0 | 0 | 0 | 70 | ||||||||||||||||||
Total
|
$ | 62,938 | $ | 4,677 | $ | 19,995 | $ | 0 | $ | 0 | $ | 87,610 |
(3) |
Loans, Continued. Internally assigned loan grades are defined as follows:
Pass – a Pass loan’s primary source of loan repayment is satisfactory, with secondary sources very likely to be realized if necessary. These are loans that conform in all aspects to bank policy and regulatory requirements, and no repayment risk has been identified.
OLEM (Other Loans Especially Mentioned) – an Other Loan Especially Mentioned has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in the deterioration of the repayment prospects for the asset or the Company’s credit position at some future date.
Substandard – a Substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful – a loan classified Doubtful has all the weaknesses inherent in one classified Substandard, with the added characteristics that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable. The Company fully charges off any loan classified as Doubtful.
Loss – a loan classified Loss is considered uncollectible and of such little value that continuance as a bankable asset is not warranted. This classification does not mean that the asset has absolutely no recovery or salvage value, but rather it is not practical or desirable to defer writing off this basically worthless asset even though partial recovery may be affected in the future. The Company fully charges off any loan classified as Loss.
|
(3) |
Loans, Continued. Age analysis of past-due loans is as follows (in thousands):
|
Accruing Loans | ||||||||||||||||||||||||||||
30-59 Days Past Due
|
60-89 Days Past Due
|
Greater Than 90 Days Past Due
|
Total Past Due
|
Current
|
Nonaccrual Loans
|
Total Loans
|
||||||||||||||||||||||
At March 31, 2013:
|
||||||||||||||||||||||||||||
Residential real estate
|
$ | 0 | $ | 1,309 | $ | 0 | $ | 1,309 | $ | 23,983 | $ | 4,511 | $ | 29,803 | ||||||||||||||
Multi-family real estate
|
0 | 0 | 0 | 0 | 3,885 | 0 | 3,885 | |||||||||||||||||||||
Commercial real estate
|
2,973 | 0 | 0 | 2,973 | 26,392 | 9,579 | 38,944 | |||||||||||||||||||||
Land and construction
|
0 | 0 | 0 | 0 | 6,361 | 872 | 7,233 | |||||||||||||||||||||
Commercial
|
696 | 0 | 0 | 696 | 7,908 | 0 | 8,604 | |||||||||||||||||||||
Consumer
|
0 | 0 | 0 | 0 | 107 | 0 | 107 | |||||||||||||||||||||
Total
|
$ | 3,669 | $ | 1,309 | $ | 0 | $ | 4,978 | $ | 68,636 | $ | 14,962 | $ | 88,576 |
At December 31, 2012:
|
||||||||||||||||||||||||||||
Residential real estate
|
$ | 0 | $ | 2,915 | $ | 0 | $ | 2,915 | $ | 22,492 | $ | 4,657 | $ | 30,064 | ||||||||||||||
Multi-family real estate
|
0 | 0 | 0 | 0 | 3,916 | 0 | 3,916 | |||||||||||||||||||||
Commercial real estate
|
0 | 0 | 0 | 0 | 27,591 | 11,535 | 39,126 | |||||||||||||||||||||
Land and construction
|
0 | 0 | 0 | 0 | 6,389 | 887 | 7,276 | |||||||||||||||||||||
Commercial
|
699 | 0 | 0 | 699 | 6,459 | 0 | 7,158 | |||||||||||||||||||||
Consumer
|
0 | 0 | 0 | 0 | 70 | 0 | 70 | |||||||||||||||||||||
Total
|
$ | 699 | $ | 2,915 | $ | 0 | $ | 3,614 | $ | 66,917 | $ | 17,079 | $ | 87,610 |
(3) |
Loans, Continued. The following summarizes the amount of impaired loans (in thousands):
|
At March 31, 2013
|
At December 31, 2012
|
|||||||||||||||||||||||
Unpaid
|
Unpaid
|
|||||||||||||||||||||||
Recorded
|
Principal
|
Related
|
Recorded
|
Principal
|
Related
|
|||||||||||||||||||
Investment
|
Balance
|
Allowance
|
Investment
|
Balance
|
Allowance
|
|||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 7,410 | $ | 7,959 | $ | 0 | $ | 7,573 | $ | 8,024 | $ | 0 | ||||||||||||
Commercial real estate
|
6,721 | 13,425 | 0 | 8,661 | 11,412 | 0 | ||||||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||||||
Commercial real estate
|
$ | 2,858 | $ | 2,858 | $ | 882 | $ | 2,874 | $ | 2,874 | $ | 366 | ||||||||||||
Land and construction
|
872 | 2,396 | 17 | 886 | 2,410 | 0 | ||||||||||||||||||
Total:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 7,410 | $ | 7,959 | $ | 0 | $ | 7,573 | $ | 8,024 | $ | 0 | ||||||||||||
Commercial real estate
|
$ | 9,579 | $ | 16,283 | $ | 882 | $ | 11,535 | $ | 14,286 | $ | 366 | ||||||||||||
Land and construction
|
$ | 872 | $ | 2,396 | $ | 17 | $ | 886 | $ | 2,410 | $ | 0 | ||||||||||||
Total
|
$ | 17,861 | $ | 26,638 | $ | 899 | $ | 19,994 | $ | 24,720 | $ | 366 |
The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands): |
For the Period Ended March 31,
|
For the Period Ended March 31,
|
|||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
Average
|
Interest
|
Interest
|
Average
|
Interest
|
Interest
|
|||||||||||||||||||
Recorded
|
Income
|
Income
|
Recorded
|
Income
|
Income
|
|||||||||||||||||||
Investment
|
Recognized
|
Received
|
Investment
|
Recognized
|
Received
|
|||||||||||||||||||
Residential real estate
|
$ | 7,520 | $ | 95 | $ | 126 | $ | 8,011 | $ | 52 | $ | 68 | ||||||||||||
Commercial real estate
|
$ | 10,904 | $ | 0 | $ | 45 | $ | 15,568 | $ | 0 | $ | 51 | ||||||||||||
Land and construction
|
$ | 869 | $ | 0 | $ | 15 | $ | 7,123 | $ | 0 | $ | 29 | ||||||||||||
Total
|
$ | 19,293 | $ | 95 | $ | 186 | $ | 30,702 | $ | 52 | $ | 148 |
No loans have been determined to be troubled debt restructurings (“TDR’s”) during the three months ended March 31, 2013 or 2012.
|
|
The allowance for loan losses on commercial and consumer loans that have been restructured and are considered TDR’s is included in the Company’s specific reserve. The specific reserve is determined on a loan by loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, or the fair value of the collateral if the loan is collateral-dependent. TDR’s that have subsequently defaulted are considered collateral-dependent. |
(4) |
Regulatory Capital. The Bank is required to maintain certain minimum regulatory capital requirements. The following is a summary at March 31, 2013 of the regulatory capital requirements and the Bank’s capital on a percentage basis:
|
Bank
|
Consent Order Regulatory Requirement
|
|||||||
Tier I capital to total average assets
|
7.10 | % | 8.00 | % | ||||
Tier I capital to risk-weighted assets
|
8.68 | % | N/A | |||||
Total capital to risk-weighted assets
|
9.93 | % | 12.00 | % |
As a result of the Consent Order discussed in Note 10, the Bank is categorized as “adequately capitalized” until the Consent Order is lifted, even if its ratios were to exceed those required to be a “well capitalized” bank. |
(5) |
Loss Per Share. Basic loss per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. Basic and diluted loss per share is the same due to the net loss incurred by the Company. Loss per common share has been computed based on the following:
|
Three Months Ended
|
||||||||
March 31,
|
||||||||
2013
|
2012
|
|||||||
Weighted-average number of common shares outstanding used to calculate basic and diluted loss per common share
|
31,511,412 | 22,509,296 |
(6) |
Stock-Based Compensation. On December 27, 2011, the Company’s stockholders approved the 2011 Equity Incentive Plan (“2011 Plan”). A total of 2,128,499 shares of common stock are available to be issued under the 2011 Plan. Options, restricted stock, performance share awards and bonus share awards in lieu of obligations may be issued under the 2011 Plan. Both incentive stock options and nonqualified stock options can be granted under the 2011 Plan. The exercise price of the stock options cannot be less than the fair market value of the common stock on the date of grant. Effective January 1, 2012, the Company adopted a Non- Employee Director Compensation Plan under which bonus shares issuable under the 2011 Plan may be earned as compensation to outside directors. During the three months ended March 31, 2013, 18,908 shares of stock valued at approximately $9,000 have been earned under the 2011 Plan and Non-Employee Director Compensation Plan as compensation to outside directors.
The Company’s prior stock option plan terminated on February 27, 2011. At March 31, 2013, no options were available for grant under this plan. Options must be exercised within ten years of the date of grant.
A summary of the activity in the prior plan is as follows:
|
Number of Options
|
Weighted-Average Exercise Price
|
Weighted- Average Remaining Contractual Term
|
Aggregate Intrinsic Value
|
||||||||||
Outstanding at December 31, 2012
|
27,356 | $ | 36.27 | ||||||||||
Options forfeited
|
13,674 | 40.30 | |||||||||||
Outstanding and exercisable at March 31, 2013
|
13,682 | $ | 32.24 | 2.4 years | $ | 0 |
(7) | Fair Value Measurements. Securities available for sale measured at fair value on a recurring basis are summarized below (in thousands): |
Fair Value Measurements at Reporting Date Using
|
||||||||||||||||
|
Quoted Prices In Active Markets for Identical Assets
|
Significant Other Observable Inputs
|
Significant Unobservable Inputs
|
|||||||||||||
Fair Value
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
As of March 31, 2013-
|
||||||||||||||||
Mortgage-backed securities
|
$ | 16,920 | $ | 0 | $ | 16,920 | $ | 0 | ||||||||
As of December 31, 2012-
|
||||||||||||||||
Mortgage-backed securities
|
$ | 18,648 | $ | 0 | $ | 18,648 | $ | 0 |
(7) | Fair Value Measurements, Continued. There were no transfers of securities between levels of inputs for the three months ended March 31, 2013. |
Assets measured at fair value on a nonrecurring basis are as follows (in thousands): |
Losses
|
||||||||||||||||||||||||
Fair | Total |
Recorded in
|
||||||||||||||||||||||
Value |
Level 1
|
Level 2
|
Level 3
|
Losses
|
Operations
|
|||||||||||||||||||
At March 31, 2013:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 1,556 | $ | 0 | $ | 0 | $ | 1,556 | $ | 548 | $ | 0 | ||||||||||||
Commercial real estate
|
6,769 | 0 | 0 | 6,769 | 4,391 | 516 | ||||||||||||||||||
Land and construction
|
872 | 0 | 0 | 872 | 449 | 0 | ||||||||||||||||||
$ | 9,197 | $ | 0 | $ | 0 | $ | 9,197 | $ | 5,388 | $ | 516 | |||||||||||||
Foreclosed real estate
|
$ | 11,452 | $ | 0 | $ | 0 | $ | 11,452 | $ | 1,046 | $ | 184 | ||||||||||||
At December 31, 2012:
|
||||||||||||||||||||||||
Residential real estate
|
$ | 1,247 | $ | 0 | $ | 0 | $ | 1,247 | $ | 451 | $ | 0 | ||||||||||||
Commercial real estate
|
6,232 | 0 | 0 | 6,232 | 2,780 | 366 | ||||||||||||||||||
Land and construction
|
887 | 0 | 0 | 887 | 449 | 0 | ||||||||||||||||||
$ | 8,366 | $ | 0 | $ | 0 | $ | 8,366 | $ | 3,680 | $ | 366 | |||||||||||||
Foreclosed real estate
|
$ | 10,938 | $ | 0 | $ | 0 | $ | 10,938 | $ | 102 | $ | 102 |
(8) | Fair Value of Financial Instruments. The estimated fair values and fair value measurement method with respect to the Company’s financial instruments were as follows (in thousands): |
At March 31, 2013
|
At December 31, 2012
|
|||||||||||||||||||||||
Carrying
|
Fair
|
Carrying
|
Fair
|
|||||||||||||||||||||
Amount
|
Value
|
Level
|
Amount
|
Value
|
Level
|
|||||||||||||||||||
Financial assets:
|
||||||||||||||||||||||||
Cash and cash equivalents
|
$ | 15,941 | $ | 15,941 | 1 | $ | 23,611 | $ | 23,611 | 1 | ||||||||||||||
Securities available for sale
|
16,920 | 16,920 | 2 | 18,648 | 18,648 | 2 | ||||||||||||||||||
Loans
|
86,074 | 85,898 | 3 | 85,209 | 85,046 | 3 | ||||||||||||||||||
Federal Home Loan Bank stock
|
1,419 | 1,419 | 3 | 1,478 | 1,478 | 3 | ||||||||||||||||||
Accrued interest receivable
|
500 | 500 | 3 | 499 | 499 | 3 | ||||||||||||||||||
Financial liabilities:
|
||||||||||||||||||||||||
Deposit liabilities
|
95,883 | 96,333 | 3 | 101,611 | 101,985 | 3 | ||||||||||||||||||
Federal Home Loan Bank advances
|
27,700 | 29,497 | 3 | 27,700 | 29,633 | 3 | ||||||||||||||||||
Junior subordinated debenture
|
5,155 | 4,832 | 3 | 5,155 | 4,836 | 3 | ||||||||||||||||||
Off-balance sheet financial instruments
|
0 | 0 | 3 | 0 | 0 | 3 |
Discussion regarding the assumptions used to compute the estimated fair values of financial instruments can be found in Note 1 to the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2012. |
(9) | Regulatory Matters – Company. The Company is subject to the supervision and regulation of the Board of Governors of the Federal Reserve System (the “Federal Reserve”). On June 22, 2010, the Company entered into a written agreement with the Federal Reserve Bank of Atlanta (“Reserve Bank”) with respect to certain aspects of the operation and management of the Company (the “Written Agreement”). |
The Written Agreement contains the following principal requirements: |
●
|
The Board of the Company must take appropriate steps to fully utilize the Company’s financial and managerial resources to serve as a source of strength to the Bank, including, but not limited to, taking steps to ensure that the Bank complies with the Consent Order entered into with the OFR and the FDIC and any other supervisory action taken by the Bank’s state or federal regulator.
|
|
●
|
The Company may not declare or pay any dividends without prior Reserve Bank and Federal Reserve approval.
|
|
●
|
The Company may not, directly or indirectly, take dividends or any other form of payment representing a reduction in capital from the Bank without prior Reserve Bank approval.
|
|
●
|
The Company and its nonbank subsidiary, OptimumBank Holdings Capital Trust I, may not make any distributions of interest, principal, or other sums on subordinated debentures or trust preferred securities without the prior written approval of the Reserve Bank and the Federal Reserve.
|
|
●
|
The Company and its nonbank subsidiary, OptimumBank Holdings Capital Trust I, may not, directly or indirectly, incur, increase, or guarantee any debt or purchase or redeem any shares of its stock without the prior written approval of the Reserve Bank.
|
|
●
|
The Company must obtain prior written consent from the Reserve Bank before appointing any new director or senior executive officer, or changing the responsibilities of any senior executive officer so that the officer would assume a different senior executive officer position, and must comply with the regulations applicable to indemnification and severance payments.
|
|
●
|
The Company must provide quarterly progress reports to the Reserve Bank, along with parent company only financial statements.
|
|
Management believes the Company is in substantial compliance with the requirements of the Written Agreement. |
(10) | Regulatory Matters – Bank. Effective April 16, 2010, the Bank consented to the issuance of a Consent Order by the FDIC and the OFR, also effective as of April 16, 2010. |
The Consent Order represents an agreement among the Bank, the FDIC and the OFR as to areas of the Bank’s operations that warrant improvement and presents a plan for making those improvements. The Consent Order imposes no fines or penalties on the Bank. The Consent Order will remain in effect and enforceable until it is modified, terminated, suspended, or set aside by the FDIC and the OFR.
The Consent Order contains the following principal requirements:
|
● |
The Board of the Bank is required to increase its participation in the affairs of the Bank and assume full responsibility for the approval of sound policies and objectives for the supervision of all of the Bank's activities.
|
|
●
|
The Bank is required to have and retain qualified and appropriately experienced senior management, including a chief executive officer, a chief lending officer and a chief financial officer, who are given the authority to implement the provisions of the Consent Order.
|
|
●
|
Any proposed changes in the Bank's Board of Directors or senior executive officers are subject to the prior consent of the FDIC and the OFR.
|
|
●
|
The Bank is required to maintain both a fully funded allowance for loan and lease losses satisfactory to the FDIC and the OFR and a minimum Tier 1 leverage capital ratio of 8% and a total risk-based capital ratio of 12% for as long as the Consent Order remains in effect.
|
|
●
|
The Bank must undertake over a two-year period a scheduled reduction of the balance of loans classified “substandard” and “doubtful” in its 2009 FDIC examination by at least 75%.
|
|
●
|
The Bank is required to reduce the volume of its adversely classified private label mortgage backed securities under a plan acceptable to the FDIC and OFR.
|
|
●
|
The Bank must submit to the FDIC and the OFR for their review and comment a written business/strategic plan covering the overall operation of the Bank.
|
|
●
|
The Bank must implement a plan to improve earnings, addressing goals and strategies for improving and sustaining earnings, major areas for improvement in the Bank's operating performance, realistic and comprehensive budgets and a budget review process.
|
|
●
|
The Bank is required to revise, implement and incorporate recommendations of the FDIC and OFR with respect to the following policies or plans:
|
m
|
Lending and Collection Policies
|
|
m
|
Investment Policy
|
(10) | Regulatory Matters – Bank, Continued. |
m
|
Liquidity, Contingency Funding and Funds Management Plan
|
|
m
|
Interest Rate Risk Management Policy
|
|
m
|
Internal Loan Review and Grading System;
|
|
m
|
Internal Control Policy; and
|
|
m
|
A plan to reduce concentration in commercial real estate loans;
|
●
|
The Bank’s Board of Directors must review the adequacy of the allowance for loan and lease losses and establish a comprehensive policy satisfactory to the FDIC and OFR for determining such adequacy at least quarterly thereafter.
|
|
|
●
|
The Bank may not pay any dividends or bonuses without the prior approval of the FDIC.
|
|
●
|
The Bank may not accept, renew or rollover any brokered deposits except with the prior approval of the FDIC.
|
|
●
|
The Bank is required to notify the FDIC and OFR prior to undertaking asset growth of 10% or more per annum while the Consent Order remains in effect.
|
|
●
|
The Bank is required to file quarterly progress reports with the FDIC and the OFR.
|
Management believes that the Bank is currently in substantial compliance with all the requirements of the Consent Order except for the following requirements: |
|
●
|
Scheduled reductions by October 31, 2011, and April 30, 2012, of 60% and 75%, respectively, of loans classified as substandard and doubtful in the 2009 FDIC Examination;
|
|
●
|
Development of a plan to reduce Bank’s concentration in commercial real estate loans acceptable to the supervisory authorities;
|
|
●
|
Capital ratio requirements of 12% Tier I and 8% Tier I leverage capital ratio.
|
The Bank has implemented comprehensive policies and plans to address all of the requirements of the Consent Order and has incorporated recommendations from the FDIC and OFR into these policies and plans. The Company entered into a contract with Moishe Gubin, Chairman of the Board of Directors, to sell approximately $2.2 million of common stock to Mr. Gubin. The additional $2.2 million in capital from Mr. Gubin is expected to enable the Bank to comply with the total risk-based capital ratio of 12% and Tier 1 leverage capital ratio of 8%. The investment by Mr. Gubin is contingent upon receiving regulatory approval. At the present time, neither the Company nor Mr. Gubin can predict when or if the regulatory approval will be obtained. In the event regulatory approval is not obtained, the Board intends to seek capital through other investors. Accordingly, there can be no assurance that the Company will raise sufficient capital for the Bank to achieve and maintain material compliance with this ratio.
|
|
(11) |
Junior Subordinated Debenture. The terms of the debenture agreement allow the Company to defer payments of interest on the debenture by extending the interest payment period at any time during the term of the debenture for up to twenty consecution quarterly periods. The Company has elected its right to defer payment of interest on the debenture. Accrued and unpaid interest on the debenture totaled $523,000 at March 31, 2013.
|
|
● |
Scheduled reductions by October 31, 2011, and April 30, 2012, of 60% and 75%, respectively, of loans classified as substandard and doubtful in the 2009 FDIC Examination;
|
|
● |
Development of a plan to reduce Bank’s concentration in commercial real estate loans acceptable to the supervisory authorities;
|
|
● |
Capital ratio requirements of 12% Tier I and 8% Tier I leverage capital ratio.
|
FDIC Guideline Requirements
|
||||||||||||||||||||
March 31,
|
December 31,
|
Adequately-
|
Well-
|
Consent
|
||||||||||||||||
2013
|
2012
|
Capitalized
|
Capitalized
|
Order
|
||||||||||||||||
Leverage ratio
|
7.10 | 8.12 | 4.00 | 5.00 | 8.00 | |||||||||||||||
Tier I risk-based capital ratio
|
8.68 | 10.23 | 4.00 | 6.00 | * | |||||||||||||||
Total risk-based capital ratio
|
9.93 | 11.48 | 8.00 | 10.00 | 12.00 |
Three Months Ended March 31, 2013
|
Year Ended December 31, 2012
|
Three Months Ended March 31, 2012
|
||||||||||
Average equity as a percentage of average assets
|
4.23 | % | 5.15 | % | 4.67 | % | ||||||
Equity to total assets at end of period
|
3.49 | % | 4.81 | % | 5.34 | % | ||||||
Return on average assets (1)
|
(6.16 | )% | (3.10 | )% | (1.54 | )% | ||||||
Return on average equity (1)
|
(145.47 | )% | (60.28 | )% | (33.07 | )% | ||||||
Noninterest expenses to average assets (1)
|
3.90 | % | 3.62 | % | 3.15 | % |
Three Months Ended March 31, | ||||||||||||||||||||||||
2013 | 2012 | |||||||||||||||||||||||
Interest
|
Average
|
Interest
|
Average
|
|||||||||||||||||||||
Average
|
and
|
Yield/
|
Average
|
and
|
Yield/
|
|||||||||||||||||||
Balance
|
Dividends
|
Rate
|
Balance
|
Dividends
|
Rate
|
|||||||||||||||||||
Interest-earning assets:
|
||||||||||||||||||||||||
Loans
|
$ | 89,442 | 1,093 | 4.89 | % | $ | 90,721 | 995 | 4.39 | % | ||||||||||||||
Securities
|
18,581 | 192 | 4.13 | 28,367 | 298 | 4.20 | ||||||||||||||||||
Other (1)
|
15,548 | 16 | 0.41 | 22,236 | 16 | 0.29 | ||||||||||||||||||
Total interest-earning assets/interest income
|
123,571 | 1,301 | 4.21 | 141,324 | 1,309 | 3.70 | ||||||||||||||||||
Cash and due from banks
|
4,076 | 421 | ||||||||||||||||||||||
Premises and equipment
|
2,915 | 2,685 | ||||||||||||||||||||||
Other
|
9,574 | 6,363 | ||||||||||||||||||||||
Total assets
|
$ | 140,136 | $ | 150,793 | ||||||||||||||||||||
Interest-bearing liabilities:
|
||||||||||||||||||||||||
Savings, NOW and money-market deposits
|
33,579 | 49 | 0.58 | 34,831 | 55 | 0.63 | ||||||||||||||||||
Time deposits
|
61,310 | 180 | 1.17 | 69,275 | 236 | 1.36 | ||||||||||||||||||
Borrowings (2)
|
32,855 | 335 | 4.08 | 36,855 | 389 | 4.22 | ||||||||||||||||||
Total interest-bearing liabilities/interest expense
|
127,744 | 564 | 1.77 | 140,961 | 680 | 1.93 | ||||||||||||||||||
Noninterest-bearing demand deposits
|
3,757 | 545 | ||||||||||||||||||||||
Other liabilities
|
2,704 | 2,247 | ||||||||||||||||||||||
Stockholders’ equity
|
5,931 | 7,040 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity
|
$ | 140,136 | $ | 150,793 | ||||||||||||||||||||
Net interest income
|
$ | 737 | $ | 629 | ||||||||||||||||||||
Interest rate spread (3)
|
2.44 | % | 1.77 | % | ||||||||||||||||||||
Net interest margin (4)
|
2.39 | % | 1.78 | % | ||||||||||||||||||||
Ratio of average interest-earning assets to average interest-bearing liabilities
|
0.97 | 1.00 |
(1)
|
Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
|
(2)
|
Includes Federal Home Loan Bank advances, other borrowings 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.
|
OPTIMUMBANK HOLDINGS, INC. | ||
(Registrant) | ||
Date: May 10, 2013 | By: | /s/ Thomas Procelli |
Thomas Procelli, | ||
Principal Executive Officer and Principal | ||
Financial Officer |
Exhibit No. |
Description
|
||
3.1
|
Amended and Restated Articles of Incorporation (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 30, 2012)
|
||
4.1
|
Bylaws (incorporated by reference from Current Report on Form 8-K filed with the SEC on May 11, 2004)
|
||
4.2
|
Form of stock certificate (incorporated by reference from Quarterly Report on Form 10-QSB filed with the SEC on August 12, 2004)
|
||
4.3
|
Form of Registration Rights Agreement between OptimumBank Holdings, Inc. and Investors (incorporated by reference from Current Report on Form 8-K filed with the SEC on October 31, 2011)
|
||
4.4
|
The Company has outstanding certain long-term debt. None of such debt exceeds ten percent of the Company’s total assets; therefore, copies of the constituent instruments defining the rights of the holders of such debt are not included as exhibits. Copies of instruments with respect to such long-term debt will be furnished to the SEC upon request.
|
||
10.1
|
OptimumBank Holdings, Inc. Non-Employee Director Compensation Plan (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 30, 2012)
|
||
10.2
|
Amended and Restated Stock Purchase Agreement, dated as of December 5 2011, between OptimumBank Holdings, Inc. and Moishe Gubin (incorporated by reference from Annual Report on Form 10-K filed with the SEC on March 30, 2012)
|
||
10.3
|
First Amendment dated June 29, 2012 to Amended and Restated Stock Purchase Agreement between OptimumBank Holdings, Inc. and Moishe Gubin dated December 5, 2011 (incorporated by reference from Current Report on Form 8-K filed with the SEC on July 6, 2012)
|
||
10.4
|
Second First Amendment dated October 25, 2012 to Amended and Restated Stock Purchase Agreement between OptimumBank Holdings, Inc. and Moishe Gubin dated December 5, 2011
|
||
31.1
|
|||
32.1
|
|||
101.INS
|
XBRL Instance Document
|
||
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
||
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Exhibit No. |
Description
|
||
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
||
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
||
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|