Ladies and gentlemen, thank you for joining us, and welcome to the Optimum Bank Holdings, Inc. 2nd Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star 9 to raise your hand and star 6 to unmute. You are also welcome to ask a question through the text Q&A box or via email at sdenison at OptimumBank.com. That is S-D-E-N-I-S-O-N at OptimumBank.com. I will now hand the conference over to Seth Denison, Managing Director of Investor Relations. Please go ahead.

Good afternoon, everyone, and thank you for joining us today for Optimum Bank Holdings second quarter 2026 earnings webcast. The second quarter represents another milestone in the evolution of Optimum Bank. During the quarter, we continue to build upon the momentum established over the past several years, delivering record quarterly earnings while surpassing 1.4 billion in total assets for the first time in the company's history. These results reflect the continued execution of our relationship-based banking strategy, disciplined credit culture, and our focus on creating long-term value for shareholders. Beyond our financial performance, the second quarter was also transformational from a corporate perspective. In May, the company announced planned executive leadership transition with our long-serving chairman, Moshe Gubin, assuming the additional role of chief executive officer, while veteran banking executive Braden Smith joined Optimum Bank as president. This transition was designed to position the company for its next phase of growth while maintaining the continuity that has defined Optimum Bank for more than 25 years. We also completed an important simplification of our capital structure through the exchange of all outstanding Series B and Series C convertible preferred stock into non-voting common stock. Because the preferred shares had already been reflected in our fully diluted share count, the transaction had minimal impact on dilution while creating a simpler and more transparent capital structure for investors going forward. Operationally, we also continued expanding our lending platform. During the quarter, Optimum Finance completed its first transaction, providing another avenue for growth while allowing the company to leverage third-party capital alongside our traditional banking platform. Combined with the earlier formation of Optimum Funding, these initiatives broaden our product offerings and create additional opportunities to serve our customers while diversifying future earnings streams. The investment community has also continued to recognize our progress. During the quarter, Optimum Bank earned two nationally recognized distinctions, including being ranked the 49th best performing community bank in the nation by S&P Global Market Intelligence, and being recognized by Raymond James as Community Bankers' Cup recipient, placing Optimum Bank among the top performing publicly traded community banks in the country. That recognition has also extended to the research community. During the quarter, Breen Capital and AGP, or Alliance Global Partners, initiated research coverage with buy ratings, while Compass Point upgraded its rating on Optimum Bank from neutral to buy. Together, these developments expanded independent research coverage while reinforcing growing institutional awareness of the company's financial performance, discipline execution, and long-term growth strategy. While external recognition is certainly encouraging, our focus remained unchanged. Every day, we remain committed to serving our customers, supporting our communities, and executing on the strategy that has produced these results. We believe that continued execution will create lasting value for our shareholders over the long term. Today's call may include forward-looking statements based on management's current expectations, assumptions, and beliefs about Optimum Bank's business and environment in which it operates. These statements are subject to risk and uncertainties that could cause actual results to differ materially from those anticipated. The call is being recorded, and we refer you to our SEC filings, including our most recent Form 10-Q, for additional information regarding risk factors and forward-looking statements. Additionally, references will be made during this call to non-GAAP financial results. Investors are encouraged to review these non-GAAP financial measures as identified in the presentation deck. Joining me today are Moshe Gubin, Chairman of the Board and Chief Executive Officer, Braden Smith, President, and Elliott Nunez, Chief Financial Officer and Executive Vice President. This leadership team combines decades of banking, financial, and executive leadership experience and is well positioned to guide the company's continued growth. After this brief presentation, Moshe, Braden, and Elliott will be available for any viewers' questions during the Q&A session. With that, I'll turn it over to Moshe to begin the presentation.

Thank you, Seth, and good afternoon, everyone. Thank you for joining us today and for your continued support of our beloved bank. When I look at slide four, I'm reminded that our performance this quarter is the result of a strategy we have consistently executed over many years. Since opening our doors in 2000, our mission has remained the same. Build a relationship-driven community bank that serves its customers while creating long-term value for shareholders. What has changed is the scale of the opportunity before us. Over the past several years, we've transformed Optimum Bank into an institution that has now surpassed $1.4 billion. Along the way, we've expanded our franchise, strengthened our leadership team, broadened our lending capabilities, and significantly increased our earnings power. Today, we are not simply a larger bank. We are a stronger and more profitable bank. During the second quarter, our annualized core return on average equity reached 26.9%, reflecting the earnings power we built while maintaining discipline, underwriting, and a conservative approach to risk. This quarter marks another important chapter in our evolution. The additions of optimum funding and optimum finance expand our lending platform and enhance our ability to meet a broader range of our borrowers' financing needs. These capabilities allow us to deepen existing relationships, support our customers across more stages of their growth, and extend those relationships further than we have been able to in the past. At the same time, our leadership transition positions the company for its next phase by maintaining the continuity that has guided our success. As chairman for more than 16 years and now as chief executive officer, I remain extremely optimistic about our future. While we are proud of what we have accomplished, I believe we are still in the early stages of our long-term growth opportunity. With that, let's turn to our second quarter financial results. Turning to slide five, I believe our second quarter results demonstrate the strength and scalability of our business model. Importantly, we believe this quarter establishes a sustainable new benchmark for our financial performance going forward. Based on our current quarterly earnings run rate of approximately $0.28 per share, we believe it is reasonable to increase our forward-looking annual earnings estimate to a range of approximately $1 per share to approximately $1.15 per share. We reported record quarterly net income of $6.7 million, representing a 43% increase over the first quarter and an 85% increase over the second quarter of last year. As a result, profitability strengthened considerably, with pre-tax income increasing by approximately $2.6 million from the first quarter. Net interest income grew to nearly $14.7 million, driven by continued loan growth and disciplined balance sheet management. At the same time, non-interest income increased to approximately $2.5 million, reflecting the continued diversification of our revenue streams. We also recorded a reversal of credit loss expense during the quarter, highlighting the continued strength of our loan portfolio. That positive credit trend continued immediately following quarter end, and on July 1st, our one loan that had been past due was paid off and another was brought current, reducing our loans more than 30 days past due to a very modest level. I also want to briefly address our earnings per share presentation. During the second quarter, we completed the exchange of all outstanding Series B and Series C convertible preferred stock into non-voting common stock. Because those preferred shares had already been reflected in our fully diluted share count, the exchange had minimal impact on diluted earnings per share. Going forward, our capital structure is simpler and easier for investors to understand. Overall, I believe these results reflect the continued execution of our long-term strategy and reinforce our confidence in the opportunities that lie ahead. Turning to slide 6, this reconciliation highlights a metric that I believe best reflects the underlying earnings power of our franchise, core pre-tax pre-provision earnings. During the second quarter, core pre-tax pre-provision earnings increased to $8.8 million, while our annualized core ROE reached 26.9%. These are exceptional results and demonstrate that our profitability continues to improve as we grow the balance sheet. Our objective has never been growth for growth's sake. our objective is to build a larger, more profitable institution that consistently generates attractive returns for our shareholders while maintaining disciplined underwriting and prudent risk management. Turning to slide seven, see, I believe this slide best illustrates the transformation of OptinBank over the past several years. Since 2022, total assets have grown at a compound annual growth rate of more than 28%, increasing from approximately $585 million to more than $1.4 billion today. During that same period, we've continued investing in our people, expanding our franchise, and building the infrastructure necessary to support our long-term growth. Our profitability has grown alongside the balance sheet. During the second quarter, net interest margin expanded to 4.57%, and we believe there is still some opportunity for further expansion. At the same time, annualized core pre-tax, pre-provisioned earnings reached nearly $32 million. These results demonstrate that the investments we've made in our people, technology, lending capabilities, and new business platforms are translating into stronger operating performance and increasing shareholder value. While we are proud of what we've accomplished, we believe there remains significant opportunity ahead. We intend to continue executing the same strategy has brought us to this point by growing responsibly, serving our customers, investing in our communities and creating long-term value for our shareholders. With that, I'll turn the presentation over to our Chief Financial Officer, Elliot Nunez, who will review our financial results in greater detail.

Thank you, Moshe. As Moshe discussed on slide number five, the second quarter reflected continued growth in earnings and profitability. I'll build on that overview by walking through the underlying revenue, funding costs, and expense trends shown on slide number 8. Total interest income increased to $21.7 million during the quarter, driven primarily by continued loan growth. Total interest expense also increased as deposit balances and borrowing supported balance sheet growth. As a result, net interest income increased to $14.7 million, up approximately $1.5 million from the first quarter and $4.5 million from the second quarter of last year. Net interest margin expanded to 4.57% compared to 4.49% in the prior quarter and 4.14% a year ago. We recorded a $37,000 reversal of credit loss expense during the quarter compared to a $770,000 provision in the first quarter, reflecting the continuous strength of our credit quality. Total non-interest income increased to $2.49 million driven by growth in service charges and other fee income. Total non-interest expense increased to $8.38 million, reflecting continued investment in personnel and technology to support the company's growth. This results contributed to pre-tax income of $8.84 million, an increase of approximately $2.64 million from the first quarter. Net income increased to $6.66 million, or $0.40 per basic share and $0.28 per diluted share. Turning to slide number nine, this slide summarizes our results for the first six months of 2026 compared to the first six months of 2025. Total interest income increased by approximately $10.6 million to $41.2 million, while net interest income increased by approximately $8.2 million to $27.9 million. This growth was primarily driven by continued expansion of the loan portfolio and higher earning assets. Total non-interest income increased by approximately $1.2 million to $4.3 million. Non-interest expense increased by approximately $4.6 million, primarily reflecting investments in personnel, technology, and infrastructure to support the company's continued growth. Pre-tax income increased to $15 million from $10.1 million during the first six months of 2025, while net income increased to $11.3 million compared to $7.5 million in the prior year period. Basic earnings per share increased to $0.79 from $0.64. Undiluted earnings per share increased to $0.48 from $0.32. Moving on now next to slide number 10, gross loans increased to approximately 1.22 billion at June 30th, 2026. Since December 31st, 2022, the loan portfolio has grown at a compound annual growth rate of 30.19%. The loan yield for the first six months of 2026 was 7.11%. Total deposits increased to approximately 1.21 billion at June 30th, 2026 representing a compound annual growth rate of 28.27% since December 31st, 2022 annualized non-interest income total approximately 8.6 million through the first six months of 2026. Since December 31st, 2022, non-interest income has grown at a compound annual growth rate of 35.68%. Now, turning over to slide number 11, credit quality remained strong during the second quarter. At June 30th, 2026, the allowance for credit losses to loans was 0.91%. Non-performing assets represented 0.22% of total assets and net charge-offs to average loans were 0%. This matrix continued to reflect the quality of our loan portfolio and our disciplined underwriting practices. The bank also remained well capitalized. Our tier one leverage ratio was 10.54% at quarter end. Turning now to the balance sheet, we continue building on that momentum achieved in 2025. Total assets increased by 401.8 million year over year to 1.4 billion at June 30th, 2026. This growth was well-funded with total deposits increasing by $335.2 million to $1.21 billion over the same period. On the funding side, we maintained strong balance sheet discipline while continuing to diversify our deposit base and maintain ample on and off balance sheet liquidity. Finally, reflecting strong earnings retention and disciplined capital management, total stockholders' equity increased by $20 million year-over-year to $134.4 million at June 30, 2026. Turning to our final slide, I believe it summarizes many of the themes we discussed throughout today's presentation. Since December 31, 2022, our loan portfolio has grown at a compound annual growth rate of 30.19%, while deposits have grown at a 28.27% compound annual growth rate. At the same time, tangible book value per diluted share has increased to $5.65. We believe that growth has been achieved without sacrificing profitability. Our efficiency ratio of 48.79% continues to compare favorably to our peer group, while our net interest margin of 4.57% remains well above the peer average. As discussed earlier, the exchange of our series B and series C convertible preferred stock during the second quarter simplified our capital structure. Although the alluded earnings per share for the first six months of 2026 reflects the impact of the exchange occurring during the reporting period, future reporting periods will reflect our simplified capital structure overall we believe this matrix demonstrate the continued execution of our long-term strategy and our commitment to creating value for our shareholders now i will turn it over back to motion thank you elliot as we conclude today's presentation i want to thank our employees customers shareholders and board of directors for their continued trust and support the results we reported today reflect the dedication of our team and the strength of the franchise we have built together.

While we are proud of another record quarter, we remain focused on the opportunities ahead. We believe Optimum Bank is well-positioned for continued growth, supported by a strong balance sheet, a diversified lending platform, disciplined credit culture, and an experienced management team committed to long-term value creation. As chairman for more than 16 years and now as chief executive officer, I am excited about the future of our company. We will continue to execute the same discipline strategy that has brought us to this point while remaining focused on serving our customers, supporting our communities, and delivering sustainable returns for our shareholders. With that, I'll turn it back to Seth to open the call for questions.

Thanks, Moshe. Optimum Bank continues to deliver a strong financial performance, and we appreciate those taking the time to learn more about us.

Let's open it up for questions. we will now begin the question and answer session a kind reminder if you would like to ask a question please raise your hand using the raise hand function at the bottom of your screen if you have dialed in to today's call please press star nine to raise your hand and star six to unmute you are also welcome to ask a question via email at sdenison at optimum bank.com That is S-D-E-N-I-S-O-N at OptimumBank.com, and it will be read aloud. Please ensure you are unmuted locally when asking your question. Kindly stand by while we compile the Q&A roster. Your first question comes from the line of Gaurav Mehta with Alliance Global Partners. Kind reminder to press star 6 to unmute. Your line is open. Please go ahead.

Yeah, thank you. I wanted to start with the annual run rate guidance that you talked about, $1 to $1.15. Just to clarify, is that number, are you expecting for 26, or that's the annual run rate going forward?

Yeah, so, Gaurav, thank you. Thank you for joining us. Well, I just, I wanted to keep to the 28 cents that we had in the second quarter. uh that should be easily matched going forward i the reason why i gave a guidance this the way i did it is you know at some point we're going to raise equity and uh you know to sustain the growth of the balance sheet and you know at some point that i the math to figure out what i raise and then you know what that what that new money out the door you know at a multiple keeping with a 10 percent capital ratio what that turns into i haven't done the math so i i kept it to a simple range of a dollar dollar 15 but you know if things remain totally constant with nothing else you know that 28 cents is easily uh easy easily able to be replicated um going forward and so in that that 28 cents there was nothing non-recurring everything was recurring in that number yeah it's nice it's nice it's a nice clean month um you know right now we have you know already in this quarter we already have you know more money up the door I mean we're running we're running at this point I think we did 300 million over the first six months so you know you figure that's that's you know 50 million extra a month uh you know 50 million at a at a nim of 457 which we think we could kind of squeeze a little more out of you know that that that's bringing us some some sizable uh accretion to our net income okay I mean

And I guess as a follow up on that, on the 20 cent number, you know, what do you think drove that sort of, you know, performance in second quarter? I remember in the first quarter, I think you were talking about 18 to 21 cents. So that number is higher. Maybe talk about some of the surprises. If you saw anything in the quarter that sort of surprised you to the upside?

No, I think, I mean, if you look at our quarter over quarter trends on the financial statement, You know, it's it's the the costs of the non-interest expenses has has been flat so far quarter over over quarter for for twenty six. And we're at full employment today. So so we're not we're not looking really to add any payroll. And so so we don't really expect payroll to go up, you know, maybe something, you know, immaterial here and there. um but with that the revenue or the total net interest income continues to rise because we're getting money out the door every loan that gets paid off is being paid off at you know most likely a uh a rate around you know five or below five and the money going out the door is you know seven plus um so every every day our our uh financial strength is getting you know better and better okay thanks for those details a follow-up question maybe on the optimum financing can you provide some color on how you're viewing that platform and and you know what kind of demand you're seeing there which sectors you plan to lend in yeah that that is literally i can't i'm if i had a fast forward button that's the one that i'd want to fast forward because i think that to me is they might even overshadow the bank you know five ten years from now as far as, you know, what they're going to make and what the size of that portfolio is going to It's, you know, it's without having the guardrails of, you know, bank regulation, we're being able to act prudently and lend money to play to deals that aren't bankable deals, but are deals that make a lot of sense. Certainly for me as a businessman, not necessarily a banker, there are deals that make a lot of sense with good coverage, full recourse loans at LTVs that are not crazy. And so we're lending against real estate for so far every deal that we've done. They're all CRE loans throughout the country. We've done already, I think now four loans. One of them is a hotel in New Jersey. One One is backed by someone's personal residence here in Miami. One of them is a hotel, a smaller hotel deal, I think, also in New Jersey. I forgot the fourth one. The fourth one was a $6 million loan. I forgot already what that was, too. But good deals, strong deals. We have good governance, how we're managing for it. We have a little bit of growing pains on operational to do it, you know, because, you know, it's It's where, you know, the group of people working here are bankers. So they're used to doing banking way of doing things. And so this is a finance company and therefore a little different. That being said, I mean, I'm really, really long. The deals that we've made so far, we're already expecting the first payoff. Our average yield is over 18%, two points in, one point out. And they're deals that are not meant to be long-term deals. So potentially they could be a pipeline for the bank. um potentially it could be an a and b deal where the bank will take an a position on something you know and then and then they'll take the b position behind it um there's a lot there's a lot to to this is a conversation uh not really meant for for for this call but if anyone wants to talk to me about it individually i could go on and on about this i'm really really long on this it's not it's not more risky but it's stuff that we're able to get a better price because it doesn't fit the traditional, you know, banker's box of our normal policies at the bank. So I'm really long. I'd be glad to elaborate further if anyone wants to talk to me offline.

All right. Thanks for those details. That's all I have.

Welcome.

Thank you.

A kind reminder, if you would like to ask a question, please raise your hand. If you have dialed in to today's call, please press star You can also email your question to sdenison at OptimumBank.com. Again, that is S-D-E-N-I-S-O-N at OptimumBank.com. Your next question comes from the line of Kenneth Billingsley with Compass Point Research and Trading. Your line is open. Please go ahead.

Hi, good afternoon. Hi, good afternoon, Ken. Thanks for joining us.

Thank you. So I do have an optimum finance question, so I'll go there first. Why was it, did it not fit the bank? Was it just because of the timing? Did they have a short-term funding need? You said it could provide loans to the bank in the future, but could you just talk about why it didn't fit the bank? Yeah, so start with understanding strategy, right?

So we're a relationship bank. We make friends with our borrowers, we get to know our borrowers, and we want to do everything for our borrowers in every vertical that we could possibly do, you know, where we can manage that. Um, so we have a borrower at the bank that borrows a, a, they borrowed money at, you know, 40% LTV. And it's a, it's a deal that, that the guarantor strength was worth, you know, a billion dollars. And, and it's a deal that, you know, that everybody in the room from loan committee knew the asset. And they basically said, you know, we want to take care of this guy. And then the borrower comes back, you know, three months later and says, you know, I have a I have a partner. We already are seeing great results. Here's all here. All of our bookings. It's a hotel. So like here's all of our deals. And this thing is going to be a home run best deal ever. And it's going to be worth, you know, double, triple what we what we what we originally appraised the deal at, which, again, was a loan was at like 40 percent on TV. They come along and then say, I want to buy out my investor that invested in this deal and I could get out basically at his cost. Can you just extend me some more money? Now, typically at the bank, when we give somebody financing, we're not looking to go back to the well on a loan, you know, and reopen a loan and modify a loan once the loan closes. You know, certainly not for like the first year. You know, it's you know, it doesn't look right. You know, where you do a deal and then you change something a couple months later. So that was a deal where instead of him finding another bank and a lot of banks don't want to do a second mortgage. But for us, since we had the first and the bank level, we were OK putting a second behind it. We were able to extend out a little bit more money, all all all underwritten, all already based on, you know, a few months of operations. We were able to underwrite the deal again, saying, well, you know, we see this deal that, you know, as soon as he has that same stability from the first couple of months of operation, this thing will appraise out, you know, double, triple what was originally appraised out. And certainly, you know, he's credit worthy and the LTV is still down. And so we were able to then do a loan for him. They're the happiest people because they wanted that loan. and they now own 100% of the deal, they got rid of their partner, and they have an operating business that's doing amazing. And instead of them having to change out the first, have a prepaid penalty, and go to find another lender, they're able to then do that deal. And so now, and so we fit a need. And now already, once the thing is going to be stable, they're going to come back to us and say, okay, can we refinance the first and second at a different interest rate for a longer period of time more fixed and in which case we're going to try to figure out whether or not we want to we want or we could lend uh at the bank level and um or or do we want to help them find a different lender that's you know wants to do a bigger you know that's a bigger deal than usually what we're going to do um so just take so just for that color right really so it stems from strategy um of meeting the borrower's needs making friends with our people and then doing a deal in this case just we couldn't do it through the bank and it didn't make sense to them to go to a different lender and for that we're able to get a better yield and we're able to meet the need of our customer they're happy we're happy and uh it falls under a different silo and so that silo was able to be you know profitable based on that kind of loan at that percentage and the bank has no effect and um and we have a happy customer out of it oh great the uh when you mentioned that are most of the loans so far to customers existing customers of the bank so so they're known to us they're not we don't we're not really lending you know risky money to random strangers you know it's it's it's it's it's not it's it's risky from the sense of it doesn't fit bank policy but it's not risky in the sense of common sense you know you know lending of knowing your borrower and taking care of the bar i think people have been telling me like i really meant to be born you know 20 30 years earlier and have been a bank you know executive in the days when relationship banking was more normal today everyone has a box and and they try to push away from relationships so and i push that you know we're a community bank and we're our community again as a jewish community as well as the south florida you know and florida community and so i push i push to take care of our people so uh we have a different deal that we made the guy the borrower is very wealthy but he's in a very messy divorce and and his wife won't sign documents and there's all kinds of issues and so we're we were able to find a way to collateralize and give and and take basically first and second mortgages and personal residences you know at lower than a 75 or 80 percent LTV which is typical you know HELOC you know policies and most banks including ours and we found the way to do it at a higher interest rate and you know and um and that's another happy happy customer and um and hopefully his divorce ends well and uh but the point is is we were able to meet his need another happy guy it's cre that's in that happens to be in south florida and again it's somebody we know and um we know we know that you know besides for you know the way it's underwritten you know morally and ethically that borrower is not going to burn us they're going to take care of us and we'll get paid off sooner than later. You know, most of these loans are probably a one-year term. I think one of the loans we made a little bit longer, but they're really relatively, you know, shorter-term loans where at the bank our normal loan is a 10-year loan with a fixed period at the beginning of the loan, you know, three years, five years, seven years.

And in the press release, I believe it said that you had a note at 10%, And I think your comment was that the yield on so far is about 18%. So is this, is it 10% just the timing or could you just talk about the financing side of it and the spread?

Oh, so no. So the note payable is, we're borrowing the money to fund those loans. We're borrowing the money today at 10%. We're in negotiations with a couple of banks to do note on note financing. to give to give um i i want these balance sheets uh when i'm talking about funding and finance because the bank already stands on their loan on their own i want finance to stand on their own have their own line of credit with the bank um and be able to borrow the money out the door to the borrower at the end of the day is 18 with two points in and one point out um and our cost of money today is 10 percent um this is so we're making a spread i think right now the portfolio is up to 24.1 or something like that. And on that 24.1, our coupon is between 18 and 20% total. So it's like probably 18 and a half, something like that. And our cost of money is, like I said, 10% on the money borrowed. And then we have overhead. So right now we're already profitable. I think you'll see that in third quarter. And we'll present a slide specific on how finance is doing. Um, and you'll see it, it, it, it, it'll be profitable. It's already profitable as far as cashflow, as far as paperwork, we, we, we, we're, we're treating some on the gap rules. We have allowances for bad debt and, and some other paper expenses to kind of eat up some of the income, but, uh, it'll be, this is going to be a home run for, for our shareholders and it diversifies and takes care of our, it takes care of, it takes care of our borrowers to meet their needs across the board. and I'm happy about that.

Last question, if you don't mind, just capital question. So it looked like you tapped the ATM during the quarter. Was it just opportunistic and anything specific? And if you could, Ed, you mentioned about raising capital. If you're looking to raise capital soon, would it be to primarily support bank growth or would a large portion of this opportunity that you see in Optimum Finance, would most of it go to supporting Optimum Finance opportunities?

No, our primary, our primary business today is the bank. So, you know, whatever we do is we is the bank, we don't lose focus on the bank, the bank is the core engine for the whole business. So, so what we're looking at is, you know, and it might be a little bit backwards in the way other folks do it. I'm not using a budget. I'm using demand. And our marketplace and our current customers and our, I call them our family, has demand today where our pipeline is, you know, I think it's north of like $700 million, which is crazy. And it's all vanilla. It's all customers we know. It's clean deals at our pricing, which is crazy. And I'm sure for any folks on this call, they have other banks that they are following or investing. Like no one has this kind of demand. We have this demand. It's unexplainable other than the fact that I call it our cold following where people support us and they take care of us and we take care of them. That being said, based on demand, I know that to hold up the balance sheet, right, thinking with a minimum 10% capital ratio, right, that means if we were to close half of that $350 million over the next six months for argument's sake, which again is a crazy growth number, But let's assume that number just because. Right. So that means at some point I need thirty five million dollars to cover the growth of that three hundred fifty million, assuming half. If there's less than that, then we'll have a little bit more capital and then we'll have money for next year. If it's more than that, I'll have to figure out what to do. The ATM strategy all along has been based on opportunity. um and and the biggest goal for me there um is that is that i want to have more liquidity in the stock and i want to have more you know ability for bigger institutions and investors to be you know shareholders and so so with with i get an opportunity to sell stock above book where it's accretive you know to our book equity then i do that and that's really mainly looking out for shareholders so there's more shares outstanding so people could trade more so like that's that's that's part of managing a stock for the marketplace not really the business the fact that it adds a little equity and that it helps us you know less and less of an equity need later down the road is really ancillary to the fact that i'm just getting more shares out there so that you know guys at bigger shops and i've had people come to me and say we want to invest you know you know 25 plus million we love your bank but you know we can't because you don't have enough liquidity and we can't own such a large percentage of your bank. And so that being said, so the more shares that I get out the door, the more likely and able to get someone to invest, you know, a $10 million chunk, you know, assuming we could get where, you know, 4.9%, which right now our market cap would have that. Someone could spend 10 million and own less than 5%, which is good for a lot of the guys that don't want to end up on a proxy, you know, with over 5%. So they keep themselves at 4.9. um you know we're getting there now finally where we can um um we could sell those shares to somebody you know and so and so i think this is really good in the long run for the shareholders because once we're able to be traded similar to our peers then our valuation should be similar to our peers and i i think on even a one dollar run rate which is the low end of my number our Our peers are trading easily 8 to 12, 8 to 14 times the PE, you know, or the PE ratio is 8 to 14 times. So with that, we should be providing shareholder value to shareholders. And most of my investors that I've sold stock to over the years, no one wants to sell. Everyone's like, we're riding this thing. Moshe, when you're ready to sell, we're going to sell with you. But in the meantime, I'm behind you, pal. We're never selling. And that's what I hear from a lot of investors. But I'm sure there's others out there that are happy that the stock is up. And it's still way lower than it should be. The stock is up and people can make a profit on their stock trade if they wanted to trade instead of invest. So hopefully that answers your question, Ken.

It does. Thank you. Congratulations to you and your team.

Thank you, sir. Appreciate your support.

There are no further audio questions at this time.

I will turn it over to Seth for email Q&A. very good thank you Karina so um guys we have a question that was emailed to me from Chris Maranac who as you know is another one of the analysts that covers us from Green Capital it's two different questions and there's a bit of an A and a B to it question 1A and I'll break it down into A and B so 1A is can you elaborate on what is making Optimum Bank successful in recent quarters at raising new deposits okay so i'm gonna i'll have brayden answer since me and elliot uh presented brayden hasn't had a chance yet to talk so we're gonna let brayden uh give

an answer to that question yeah i think you know uh thanks moisha first and then you know i think when you look at this when we um kind of got involved in in on may 1st you looked at this You know, being very relationship focused, we took a look at the existing portfolio and really said, you know, if there's an opportunity just with some low hanging fruit to go into the portfolio, look to expand existing relationships we had, we dedicated a team internally to achieve that. So I would say part of that success has been that team being very successful and expanding existing relationships that we had, where we didn't have a lot in the operating accounts or even on the personal side that we went after. And secondly, the team has done a really fantastic job, especially on the Treasury side, of bringing in new relationships to the bank. And that has been a really nice surprise for the first, well, for the second quarter. Sure.

So one B to that question is, do you attribute this to customer acceptance to a broader, deeper bank relationship, new customers, or a focus on paying specific REITs?

So on two of the three there in terms of customer acceptance of broader and deeper relationships, absolutely. new relationships absolutely and you know we've been very disciplined like we are on the lending side we've been very disciplined on the uh deposit pricing standpoint as well and so i think the team's done a very good job of managing that as as best they can okay so we've got a question two and i'll break that up again to 2a and 2b 2a is how do you approach loan concentrations at optimal bank well i i'll start with that and then i'll give it to you okay

no no and i think in ken and ken's question to me kind of touched on that is you know the reality is is that you know we i guess i'm elaborate on it is it is that our our lending basically has like three different three different types and pricing you know we have helix which are you know a flat uh it's a prime plus a half you know program same program for everybody across the board um and so that pricing stays that the then we have like the ar lending which we do for the for the nursing home world and that pricing sits uh it's a prime plus three pricing and that sits everything else that we have is basically the same price we don't we don't we're not we don't change our pricing to kind of get a certain type of loan in the door and with that we play we play it as it lies whatever comes in the door we we we act on we know who the borrowers are anyway like i said earlier and so from that we don't set we have set concentration limits from from a risk management perspective and that's how through credit and and we look at that on the board level um regularly but when it comes to actual lending and making a lending decision it's not part of the decision process where people coming in the door with a loan the loan makes sense we're going to do the loan regardless of where we are in the concentration of that specific segment you know if it's a cre deal so that we also have sub concentrations when it comes to cre stuff but regardless it comes in the door we we we look at the deal the deal underwrites low ltv you know meets all of our criteria so it makes no difference what whether that finds its way under you know retail multifamily you know hospitality doesn't matter to us and i would add too i mean as we've mentioned in the past, I mean, you know, we pricing discipline is something that we keep a very close eye on and we stick to it.

And when you look at the marketplace of which we're in between, you know, Palm Beach, Miami, there are, you know, and I forgot the exact number of how many, you know, C&I businesses that have, you know, 35, 40 million in annual revenue or more. And, you know, you've got every bank in the world that's got a commercial team down here and and deals on the CNI side that should get priced at SOFR plus 300, that might be close to fitting our bucket because of the competition is getting priced SOFR plus 150. And our viewpoint is, you know, taking into account, you know, shareholder value and risk and reward, it's just not there. It just doesn't make sense to put capital out at 5% when we've got the pipeline that we do that you know we're able to get seven percent north and frankly i think in our opinion it's less risk so um you know i i would love we get asked the concentration question all the time it's something that you know we'd love to be a little more broad-based um but we're also not gonna do deals that don't make sense and it's pricing that that doesn't fit fit our uh our model So I think you guys, for the most part, answered 2B.

I'll read 2B out if you want to add anything to it, but I think that was a pretty comprehensive response. So 2B is particularly how do you consider the maximum size of any given borrower loan or relationships relative to portfolio, capital, and regulatory guidelines?

Well, the technical answer to that starts with, We have legal lending limits that's defined, and we put a little bit of a governor on that number as opposed to 100% of our legal lending limit. We lend a little bit less than that. That being said, if a deal underwrites and the coverage is there and the LTV is fine and this cash flow to support repayment alone, it doesn't matter to us. I think we differ in opinion with maybe some conventional wisdom that a bigger loan people think is more risky. I think it's less risky. You do a bigger loan to a guy that's worth a lot more money. He has the wherewithal if something goes bad to be able to meet it, you know, take care of take care of his obligations to us. A guy who's thinner on the deal and his only asset is this one item. He might care more because it's only it's his own asset, but he doesn't have the, you know, the well to draw from to try to meet a need. You know, if he doesn't have if he doesn't have the money to pay his mortgage or something goes wrong. And so we so we'll lend, you know, you know, as much as we as much as as much as the request is for up to our lending limit, you know, without pricing for the right borrower every day of the week.

And I would only add to when you look at the portfolio to every deal that we have in there has full personal recourse to back to the.

Yeah, we were on an investor call and somebody asked that question. and i don't know how we realize we we've never told the world that we should we don't do non-recourse lending every loan we have has recourse to it uh full recourse um and so we have to remember to keep telling people that because i guess people think the automatic assumption we're doing this kind of cre that they think it's big office building in downtown manadin or somewhere and there's no you know maybe a bad boy carve out but no guarantees and that's the that's that can't be further away from the truth for us. You know, the CRE we're doing is stuff that's some owner occupied, some non-owner occupied, some owner occupied, but by regulations, it's considered non-owner occupied. And the point is, they're all recourse deals, all strong deals. And that's why we haven't had a bad loan in many, many, many years.

And I would only add to, I mean, since the time I've been here, I mean, I've been pleasantly surprised at the strength of the guarantors that we have uh on the loan portfolio it's not you know these are individuals that have you know three to ten times the loan amount plus you know a decent percentage in cash remarkable securities and significant cash flow from other other businesses so it's you know it's one of the reasons why our credit metrics uh continue to be uh as strong as they are okay i've got two more questions that have come in.

So the first one is, your allowance for credit losses has declined from 1.2% of loans in 2022 to 0.91% today, while the portfolio has more than doubled. Why is 91 basis points adequate given the pace of loan growth and concentration in commercial real estate?

Okay, so I'll let Elliot elaborate, but I'll just start it by saying, you know, first things first is we haven't changed our policy on how we create our allowance. Our allowance has been, you know, measured, you know, with environmental factors and quantitative and qualitative factors that have been using historical bad debt and as well as environmental factors that create some kind of metric going forward and we've been maintained consistency we haven't changed anything our our battle is the fact that we have no bad loans so the history is dictating we should be at zero bad debt and therefore zero allowance you know but we are fighting that in fact you know the last couple board meetings i've been suggesting let's put extra money into the allowance just because people in the marketplace whoever wrote that question

is exactly a metric that i would think someone's going to look at and say hold on your numbers too low but reality is based on our history it's it's way too high so that being said elliot why don't you elaborate on that unless i already solved everything you have nothing to add i'll add a little bit you cover most of it but when you look at the allowance for loan losses you're going to realize there are three components it's a historical loss there's the qualitative factors and then there is the forward look so as you go back in time i was mentioning the question we were at 1.2 to zero, there was a point in time we did have some specific reserves on the books. As the quality of those loans has increased, those specific reserves have come up and up and up. So what you're left with nowadays is mostly general reserve. That general reserve in the last few quarters of this year has been positively impacted by two things, an improvement in Q factors, number one, and also on the forward look. Now, as we head into the second half of 2026, we do expect that that forward look is going to shrink and probably the qualitative factors when it comes to concentration and growth will get a little bit higher. So I think we're going to be rising above that 91 and getting much closer to the 1% for the rest of the year.

And I would only add that, you know, we've got a very disciplined approach to this. It, you know, we look at the past due report on a daily basis that, you know, if a borrower gets to be 10 to 15 days past due, they're getting a phone call from either moisture myself or a chief lending officer at 30 days they're getting a demand to bring current and at 45 days they're they're getting a demand to pay in full and so we we keep a very close eye on the portfolio we are you know monitoring it on daily basis and it like i said it's worked out well um i've been uh been you know pleasantly surprised at how quickly if moisture i call and say hey you uh you're you know, 15 days past due, they don't usually get to 16.

Okay, this is the last question that we have submitted, so following the preferred stock exchange, can you clarify what investors should use as the normalized share count for calculating EPS going forward, and how investors should think about tangible book value per share under the new capital structure?

Okay. That is a good question, and I don't have a good answer. Seth, maybe you have an answer for that.

I do. Oh, boy.

Who has a half an hour?

So it was explained by one of Elliott's lieutenants, Natasha, who's a very gifted, capable accountant. And essentially, because the conversion occurred in the middle of the second quarter, there was a portion of the second quarter where we did still have the preferred share structure. And so to normalize it for the second quarter, we still had to present it as a fully diluted number because it doesn't just turn on a dime. It's not like at the end of the quarter, it was all common equity. So that will ultimately further normalize in the Q3, and by the time you get to the end of the year, it's basically all going to be considered common equity, and there's not going to be a distinction between.

But our investors should still use a diluted EPS number, not the regular number.

For the time being, that is right.

So for their question, they asked, what is our amount of shares that we have outstanding today?

It's roughly $24,790,000 something. There you go, $24,800,000 rounded. Yes, and it's in the presentation, and it's on our investor website. It's in our second quarter deck. It's in our earnings release, so it's not difficult to find the exact numbers.

Okay.

Or they can always email me, and I'm happy to give them the exact number.

Hopefully that answers their question.

Okay. Anything else? I think that's going to be it. I think we can wrap up the second quarter earnings.

I want to thank everybody for joining us today. Thank you for your support. Thank you for your interest. Anyone needing any follow-up, please feel free to reach out to Seth, myself, or even Brayden, I guess. And we'd be glad to schmooze it up with you and let you know why Optimum is a good investment. With that, wish everybody a good day. Again, just thank you, thank you, thank you, and be well.

This concludes today's call. Thank you for attending. You may now disconnect.

All right.