OptimumBank(OPHC) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - As of December 31, 2025, the company surpassed $1.1 billion in total assets, achieving record quarterly and annual earnings, with full-year net income of approximately $16.65 million, reflecting a nearly 27% increase compared to 2024 [2][9][18] - The return on average equity reached nearly 15% on a GAAP basis and 21.6% on a core basis, indicating strong profitability metrics [9][10] - Net income for the fourth quarter was $4.85 million, an increase of about $500,000 from the third quarter and over $900,000 from the prior year's quarter [10][11] - Earnings per share grew from $0.18 in the fourth quarter of the previous year to $0.21 in the latest quarter [11][17] Business Line Data and Key Metrics Changes - Net interest income rose by more than $800,000 quarter-over-quarter to $11.87 million, supported by higher loan balances and improved funding costs [11][16] - Non-interest income totaled $1.73 million for the quarter, remaining well above year-ago levels despite lower loan prepayment activity [12][16] - Total non-interest income for the year was $6.77 million, representing a 46.5% year-over-year growth [20] Market Data and Key Metrics Changes - Gross loans ended the year at $958.79 million, reflecting a year-over-year growth of $154.55 million or 19.2% [19] - Total deposits reached $931.75 million, representing year-over-year growth of 20.7% [19] - The allowance for credit losses to loans ratio stood at 1.07%, with non-performing assets to total assets ratio at 0.32%, indicating strong credit quality [21][22] Company Strategy and Development Direction - The company aims to roll out a new subsidiary for HUD and FHA-insured financing solutions in early 2026, targeting multifamily and healthcare properties to diversify revenue [3][4] - The strategy includes maintaining disciplined loan growth and enhancing client relationships, particularly in the skilled nursing and senior housing sectors [3][4][32] - The company is focused on prudent capital deployment and investing in infrastructure to support sustainable long-term value for shareholders [26][57] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining profitability and growth, with expectations of loan portfolio growth of 25% or higher [40][43] - The company anticipates that its operational efficiency will improve as it scales, with no significant increase in the cost of doing business expected [57] - Management highlighted the importance of relationships with clients, which contribute to stable loan performance and growth [54] Other Important Information - The company celebrated its 25th anniversary in 2025, marking a significant milestone in its history [2][3] - The capital structure has been simplified to enhance transparency for investors, allowing for clearer modeling of earnings power [6][49] Q&A Session Summary Question: Opportunities in bridge to HUD financing - Management discussed the potential for significant growth in the skilled nursing and senior housing sectors, with expectations to reach $250 million in two to three years [31][33] Question: EPS guidance assumptions - Management indicated that the EPS guidance of $0.18-$0.21 is based on current performance and expectations of loan growth and stable margins [40][41] Question: Long-term loan growth rate without compromising credit quality - Management expects sustainable loan growth of 25% or higher, supported by strong relationships with loyal customers [43] Question: AllianceBernstein's increased economic exposure - Management clarified that the preferred stock structure is designed to simplify ownership for insiders and that conversions to common stock are anticipated [44][45] Question: Sectors driving loan growth and potential stress - Management emphasized that strong relationships with clients mitigate stress in their portfolios, contributing to stable loan performance [54] Question: Regulatory thresholds influencing growth - Management reassured investors that the infrastructure is in place to support growth without significant additional costs, indicating readiness for scaling beyond $1 billion in assets [57][58]