UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2019

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to _________

 

Commission File Number: 000-50755

 

OPTIMUMBANK HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

 

Florida   55-0865043
(State or other jurisdiction of
incorporation or organization)		   (IRS Employer
Identification No.)

 

2477 East Commercial Boulevard, Fort Lauderdale, FL 33308

(Address of principal executive offices)

 

954-900-2800

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer [X]   Smaller reporting company [X]
    Emerging growth company [  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 1,928,776 shares of Common Stock, $.01 par value, issued and outstanding as of August 14, 2019.

 

 

 

   

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

INDEX

 

  Page
   
PART I. FINANCIAL INFORMATION  
   
Item 1. Financial Statements 1
   
Condensed Consolidated Balance Sheets - June 30, 2019 (unaudited) and December 31, 2018 1
   
Condensed Consolidated Statements of Operations – Three and Six Months ended June 30, 2019 and 2018 (unaudited) 2
   
Condensed Consolidated Statements of Comprehensive (Loss) Income - Three and Six Months ended June 30, 2019 and 2018 (unaudited) 3
   
Condensed Consolidated Statements of Stockholders’ Equity - Three and Six Months ended June 30, 2019 and 2018 (unaudited) 4
   
Condensed Consolidated Statements of Cash Flows - Six Months ended June 30, 2019 and 2018 (unaudited) 5
   
Notes to Condensed Consolidated Financial Statements (unaudited) 7
   
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 24
   
Item 4. Controls and Procedures 30
   
PART II. OTHER INFORMATION  
   
Item 1. Legal Proceedings 30
   
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 30
   
Item 3. Defaults Upon Senior Securities 30
   
Item 4. Mine Safety Disclosures 30
   
Item 5. Other Information 30
   
Item 6. Exhibits 30
 
SIGNATURES 31

 

 i 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)

 

    June 30, 2019     December 31, 2018  
    (Unaudited)        
Assets:                
Cash and due from banks   $ 1,853     $ 1,934  
Interest-bearing deposits with banks     10,464       6,049  
Total cash and cash equivalents     12,317       7,983  
Securities available for sale     6,213       2,359  
Securities held-to-maturity (fair value of $6,874 and $7,175)     6,632       7,139  
Loans, net of allowance for loan losses of $2,053 and $2,243     80,861       77,200  
Federal Home Loan Bank stock     642       1,132  
Premises and equipment, net     2,676       2,668  
Accrued interest receivable     370       314  
Other assets     1,559       1,350  
                 
Total assets   $ 111,270     $ 100,145  
                 
Liabilities and Stockholders’ Equity:                
                 
Liabilities:                
Noninterest-bearing demand deposits     10,925       9,638  
Savings, NOW and money-market deposits     45,588       26,682  
Time deposits     29,388       26,058  
                 
Total deposits     85,901       62,378  
                 
Federal Home Loan Bank advances     13,000       24,600  
Federal funds purchased     —       560  
Junior subordinated debenture     5,155       5,155  
Official checks     142       274  
Other liabilities     2,028       1,872  
                 
Total liabilities     106,226       94,839  
                 
Commitments and contingencies (Notes 8, 10, 11 and 12)                
Stockholders’ equity:                
Preferred stock, no par value; 6,000,000 shares authorized: Designated Series A, no par value, $25,000 liquidation value per share, no shares issued and outstanding     —       —  
Common stock, $.01 par value; 5,000,000 shares authorized, 1,927,579 shares issued and outstanding in 2019 and 1,858,020 shares issued and outstanding in 2018     19       18  
Additional paid-in capital     36,356       36,128  
Accumulated deficit     (31,086 )      (30,510 )
Accumulated other comprehensive loss     (245 )      (330 )
                 
Total stockholders’ equity     5,044       5,306  
Total liabilities and stockholders’ equity   $ 111,270     $ 100,145  

 

See accompanying notes to condensed consolidated financial statements.

 

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except per share amounts)

 

   Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2019   2018   2019   2018 
Interest income:                    
Loans  $1,097   $938   $2,187   $1,854 
Securities   72    73    122    134 
Other   77    32    125    67 
                     
Total interest income   1,246    1,043    2,434    2,055 
                     
Interest expense:                    
Deposits   360    95    649    207 
Borrowings   133    190    283    338 
                     
Total interest expense   493    285    932    545 
                     
Net interest income   753    758    1,502    1,510 
                     
Credit for loan losses   —    2,100   —    2,100
                     
Net interest income after credit for loan losses   753    2,858    1,502    3,610 
                     
Noninterest income:                    
Service charges and fees   68    —    90    9 
Other   19    35    34    40 
                     
Total noninterest income   87    35    124    49 
                     
Noninterest expenses:                    
Salaries and employee benefits   529    460    1,030    898 
Professional fees   128    158    227    223 
Occupancy and equipment   134    102    247    206 
Data processing   129    99    253    176 
Insurance   18    26    42    50 
Regulatory assessment   18    39    22    78 
Other   314    105    433    409 
                     
Total noninterest expenses   1,270    989    2,254    2,040 
                     
Net (loss) earnings before income tax benefit   (430)   1,904    (628)   1,619 
                     
Income tax benefit   —    —    (52)   — 
                     
Net (loss) earnings  $(430)  $1,904   $(576)  $1,619 
                     
Net (loss) earnings per share - Basic and diluted  $(.23)  $1.35   $(.31)  $1.25 

 

See accompanying notes to condensed consolidated financial statements.

 

 2 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited)
(In thousands)

 

    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
    2019     2018     2019     2018  
                         
Net (loss) earnings   $ (430 )   $ 1,904     $ (576 )   $ 1,619  
                                 
Other comprehensive income (loss):                                
Change in unrealized gain (loss) on securities:                                
Unrealized gain arising during the period     68       346       74       282  
                                 
Amortization of unrealized loss on securities transferred to held-to-maturity     23       6       39        6  
Reclassification adjustment for unrealized loss on securities transferred to held-to-maturity     -       (432 )      -        (432 ) 
                                 
Other comprehensive income (loss) before income tax (expense) benefit     91       (80 )     113        (144 ) 
                                 
Deferred income tax (expense) benefit on above change     (23 )      20       (28 )       38  
                                 
Total other comprehensive income (loss)     68       (60 )     85       (106  ) 
                                 
Comprehensive (loss) income   $ (362 )    $ 1,844     $ (491 )    $ 1,513   

 

See accompanying notes to condensed consolidated financial statements.

 

 3 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Stockholders’ Equity

Three and Six Months Ended June 30, 2019 and 2018

(Dollars in thousands)

 

                          Accumulated    
   Preferred Stock   Common Stock   Additional
Paid-In		   Accumulated   Other Comprehensive   Total
Stockholders’		 
   Shares   Amount   Shares   Amount   Capital   Deficit   Loss   Equity 
Balance at December 31, 2017   7   $-    1,120,947   $11   $34,090   $(31,306)  $(250)  $2,545 
                                         
Proceeds from Sale of Common Stock (unaudited)   -    -    20,814    -    46    -    -    46 
                                         
Common stock issued as compensation to directors (unaudited)   -    -    144,742    1    614    -    -    615 
                                         
Net loss for the three months ended March 31, 2018 (unaudited)   -    -    -    -    -    (285)   -    (285)
                                         
Net change in unrealized loss on securities available for sale, net of income tax benefit (unaudited)   -    -    -    -    -    -    (47)   (47)
                                         
Balance at March 31, 2018 (unaudited)   7   $-    1,286,503   $12   $34,750   $(31,591)  $(297)  $2,874 
                                         
Proceeds from Sale of Common Stock (unaudited)   -    -    143,203    2    356    -    -    358 
                                         
Common stock issued in exchange for Preferred Stock (unaudited)   (7)   -    79,186    1    (1)   -    -    - 
                                         
Net earnings for the three months ended June 30, 2018 (unaudited)   -    -    -    -    -    1,904    -    1,904 
                                         
Net change in unrealized loss on securities available for sale, net of income taxes (unaudited)   -    -    -    -    -    -    259    259 
                                         
Amortization of unrealized loss on securities transferred to held to maturity (unaudited)   -    -    -    -    -    -    6    6 
                                         
Unrealized loss on securities transferred to held to maturity, net of income tax benefit (unaudited)   -    -    -    -    -    -    (324)   (324)
                                         
Balance at June 30, 2018 (unaudited)   -   $-    1,508,892   $15   $35,105   $(29,687)  $(356)  $5,077 
                                         
Balance at December 31, 2018   -   $-    1,858,020   $18   $36,128   $(30,510)  $(330)  $5,306 
                                         
Net loss for the three months ended March 31, 2019 (unaudited)   -    -    -    -    -    (146)   -    (146)
                                         
Net change in unrealized loss on securities available for sale, net of income taxes (unaudited)   -    -    -    -    -    -    3    3 
                                         
Amortization of unrealized loss on securities transferred to held-to-maturity (unaudited)   -    -    -    -    -    -    14    14 
                                         
Balance at March 31, 2019 (unaudited)   -   $-    1,858,020   $18   $36,128   $(30,656)  $(313)  $5,177 
                                         
Common stock issued and reclassified from other liabilities (unaudited)   -    -    11,250    -    28    -    -    28 
                                         
Common stock issued as compensation to directors (unaudited)   -    -    58,309    1    200    -    -    201 
                                         
Net loss for the three months ended June 30, 2019 (unaudited)   -    -    -    -    -    (430)   -    (430)
                                         
Net change in unrealized loss on securities available for sale, net of income taxes (unaudited)   -    -    -    -    -    -    53    53 
                                         
Amortization of unrealized loss on securities transferred to held-to-maturity (unaudited)   -    -    -    -    -    -    15    15 
                                         
Balance at June 30, 2019 (unaudited)   -   $    -    1,927,579   $19   $36,356   $(31,086)  $(245)  $5,044 

 

See accompanying notes to condensed consolidated financial statements

 

 4 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

    Six Months Ended
June 30,		  
    2019     2018  
Cash flows from operating activities:                
Net (loss) earnings   $ (576 )    $ 1,619  
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities:                
Depreciation and amortization     86       71  
Credit for loan losses     —       (2,100 )
Common stock issued as compensation to directors     201       —  
Net amortization of fees, premiums and discounts     94       116  
Increase in accrued interest receivable     (56 )      (12 )
Increase in other assets     (237 )      (3 )
Increase in official checks and other liabilities     52       623  
Net cash (used in) provided by operating activities     (436 )      314  
                 
Cash flows from investing activities:                
Purchase of securities available for sale     (4,153 )     —  
Principal repayments of securities available for sale     339       558  
Principal repayments of securities held-to-maturity     527       186  
Net increase in loans     (3,702 )      (814 )
Purchases of premises and equipment     (94 )      (105 )
Redemption (purchase) of FHLB stock     490       (236 ) 
                 
Net cash used in investing activities     (6,593 )      (411 )
                 
Cash flows from financing activities:                
Net increase (decrease) in deposits     23,523       (13,692 )
Net decrease in federal funds purchased     (560 )      —  
Net (decrease) increase in FHLB Advances     (11,600 )      6,050  
Proceeds from sale of common stock     —       404  
                 
Net cash provided by (used in) financing activities     11,363       (7,238 )
                 
Net increase (decrease) in cash and cash equivalents     4,334       (7,335 )
                 
Cash and cash equivalents at beginning of the period     7,983       11,665  
                 
Cash and cash equivalents at end of the period   $ 12,317     $ 4,330  

 

See accompanying notes to condensed consolidated financial statements

 

 5 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Condensed Consolidated Statements of Cash Flows (Unaudited), Continued

(In thousands)

 

    Six Months Ended
June 30,		  
    2019     2018  
Supplemental disclosure of cash flow information:                
Cash paid during the period for:                
Interest   $ 776     $ 392  
                 
Income taxes   $ —     $ —  
                 
Noncash transactions -                
Change in accumulated other comprehensive loss, net change in unrealized gain (loss) on securities available for sale, net of income taxes   $ 85     $ (106 )
                 
Transfer of securities from available for sale to held-to-maturity     —       7,945  
                 
Amortization of unrealized loss on securities transferred to held-to-maturity   $ 39     $ 6  
                 
Reclassification of stock compensation issued as compensation to directors from other liabilities to common stock   $ —     $ 615  
                 
Common stock issued and reclassified from other liabilities     28       —  

 

See accompanying notes to condensed consolidated financial statements

 

 6 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General. OptimumBank Holdings, Inc. (the “Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered commercial bank. The 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 community banking services to individual and corporate customers through its three banking offices located in Broward County, Florida.
   
  Basis of Presentation. 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 June 30, 2019, and the results of operations and cash flows for the three and six month periods ended June 30, 2019 and 2018. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six month periods ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year.
   
 

Junior Subordinated Debenture. The Company is in default with respect to its $5,155,000 Junior Subordinated Debenture (the “Debenture”) due to its failure to make certain required interest payments under the Debenture. The Debenture was issued to OptimumBank Holdings Capital Trust I, a Delaware statutory trust formed by the Company for the purpose of issuing and selling certain securities (the “Trust Preferred Securities”) representing undivided beneficial interests in the Debenture. The trust issued a total of 5,000 Trust Preferred Securities.

 

The Trustee, Wells Fargo Bank, for the Debenture (the “Trustee”) and the beneficial owners of the Debenture are entitled to accelerate the payment of the $5,155,000 principal balance plus accrued and unpaid interest totaling $1,864,000 at June 30, 2019. To date, neither the Trustee nor the holders have accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty.

 

In May 2018, a company affiliated with a director of the Company (the “New Holder”) purchased all 5,000 Trust Preferred Securities from a third party. During the third quarter of 2018, the New Holder sold its rights in 694 of the Trust Preferred Securities to several unaffiliated third parties, who subsequently exchanged these Trust Preferred Securities for 301,778 shares of the Company’s common stock. Under the Written Agreement with the Federal Reserve Bank of Atlanta the exchange of Trust Preferred Securities for the Company’s common stock cannot reduce the principal amount of the Debenture collateralizing the Trust Preferred Securities. Accordingly the transaction was recorded as an increase in the Company’s equity interest in the unconsolidated subsidiary trust, presented in “Other Assets” in the accompanying condensed consolidated balance sheets.

 

Although the Company and the New Holder have not executed a formal, definitive bilateral agreement, the New Holder has provided the Company with written representations that the New Holder will not accelerate and demand payment of any of the remaining 4,306 Trust Preferred Securities principal or accrued interest within twelve months from August 13, 2019, the date the Company’s Form 10-Q as of and for the period ended June 30, 2019, was filed with the Securities and Exchange Commission. See Note 10.

   
  Comprehensive Loss. GAAP 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 condensed consolidated balance sheets, such items along with net (loss) earnings, are components of comprehensive loss.

 

Accumulated other comprehensive loss consists of the following (in thousands):

 

    June 30,     December 31,  
    2019     2018  
             
Unrealized gain (loss) on securities available for sale   $ 10     $ (64 )
Unamortized portion of unrealized loss related to securities available for sale transferred to securities held-to-maturity     (338 )     (377 )
Income tax benefit     83       111  
                 
    $ (245 )   $ (330 )

 

  Income Taxes. The Company assessed its earnings history and trends and estimates of future earnings, and determined that the deferred tax asset could not be realized as of June 30, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
   
  (continued)

 

 7 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(1) General, Continued.

 

Reclassifications. Certains amounts have been reclassified to allow for consistent presentation in the periods presented.

 

Recent Pronouncements. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases on the condensed consolidated balance sheet. The Company adopted ASU 2016-02 on January 1, 2019. Our only lease at the adoption date was an operating lease for a branch location that has a 5 year term, commenced in December 2017, does not offer any options to extend, and does contain a rent escalation clause. The effect of this ASU increased total assets by $281,000 and total liabilities by $281,000, at the adoption date. With respect to the lease recognized on the condensed consolidated balance sheet as of June 30, 2019, the right of use asset of $246,000 and lease liability of $248,000 are included in the caption “other assets” and “other liabilities”, respectively, in the accompanying condensed consolidated balance sheet. The discount rate used in this calculation was 2.6%.

 

 

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses (Topic 326). The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU will take effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements. In July 2019, the FASB board voted to ask its staff to prepare an exposure draft proposing the new effective dates for ASU NO 2016-13. If approved, the new effective date for the Company would be January 1, 2023.

   
  (continued)

 

 8 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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):

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At June 30, 2019:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $4,818   $181   $—   $4,999 
Mortgage-backed securities   1,814    61    —    1,875 
Total   6,632    242    —    6,874 
Available for Sale:                    
SBA Pool Securities  $2,112   $—   $(54)  $2,058 
Collateralized mortgage obligations   1,190           22    —    1,212 
Mortgage-backed securities   2,901    42    —    2,943 
Total  $6,203   $64   $(54)  $6,213 

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At December 31, 2018:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $5,183   $25   $(4)  $5,204 
Mortgage-backed securities   1,956    15    —    1,971 
Total  $7,139   $40   $(4)  $7,175 
Available for Sale -                    
SBA Pool Securities  $2,423   $-   $(64)  $2,359 

 

In April 2018, the bank transferred securities of $7,945,000 from the available-for-sale category to the held-to-maturity category at their then fair values resulting in unrealized losses of $432,000. The unrealized loss was recorded in stockholders’ equity net of amortization and net of tax and is being amortized over the remaining term of the securities. At June 30, 2019 and December 31, 2018, $94,000 and $55,000, respectively, has been amortized.

 

There were no sales of securities during the three and six month periods ended June 30, 2019 and 2018.

 

Securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows (in thousands):

 

    At June 30, 2019  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Available for Sale -                                               
SBA Pool Securities   $ 54     $ 2,058     $ —     $ —  

 

    At December 31, 2018  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Held-to-Maturity -                                
Collateralized mortgage obligations   $                  4     $ 1,361     $                  —     $ —  
Available for Sale -                                
SBA Pool Securities   $ 24     $ 829     $ 40     $ 1,530  

 

(continued)

 

 9 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospectus of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

 

At June 30, 2019 and December 31, 2018, the unrealized losses on six and seven investment securities, respectively, 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.

   
  (continued)

 

 10 

 

  

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans. The components of loans are as follows (in thousands):

 

   

At
June 30,

2019

    

At
December 31,

2018

  
             
Residential real estate   $ 26,588     $ 27,204  
Multi-family real estate     4,200       8,195  
Commercial real estate     46,985       36,634  
Land and construction     157       1,998  
Commercial     4,779       4,997  
Consumer     122       260  
                 
Total loans     82,831       79,288  
                 
Add (deduct):                
Net deferred loan fees, costs and premiums     83       155  
Allowance for loan losses     (2,053 )     (2,243 )
                 
Loans, net   $ 80,861     $ 77,200  

 

(continued)

 

 11 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued. An analysis of the change in the allowance for loan losses follows (in thousands):

 

    Residential
Real Estate		     Multi-Family
Real Estate		     Commercial
Real Estate		     Land and
Construction		     Commercial     Consumer     Unallocated     Total  
Three Months Ended June 30, 2019:                                                                
                                                                 
Beginning balance   $ 532     $ 65     $ 628     $ —     $ 553     $ 19     $ 250     $ 2,047  
Provision (credit) for loan losses     5       (24 )     50       (5 )     5       (8 )     (23 )     —  
Charge-offs     —       —       —       —       —       —       —       —  
Recoveries     —       —       —       6       —       —       —       6  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Three Months Ended June 30, 2018:                                                                
Beginning balance   $ 647     $ 67     $ 712     $ 28     $ 279     $ 59     $ 2,201     $ 3,993  
Provision (credit) for loan losses     18       (14 )     27       (8 )     (13 )     (17 )     (2,093 )     (2,100 )
Charge-offs     —       —       —       —       —       (3 )     —       (3 )
Recoveries     —       —       —       6       —       3       —       9  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  
                                                 

Six Months Ended June 30, 2019:

                                                
                                                 
Beginning balance   $ 544     $ 88     $ 567     $ 19     $ 850     $ 25     $ 150     $ 2,243  
(Credit) provision for loan losses     (7 )     (47 )     306       (30 )     (292 )     (7 )     77       —  
Charge-offs     —       —       (195 )     —       —       (7 )     —       (202 )
Recoveries     —       —       —       12       —       —       —       12  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Six Months Ended June 30, 2018:                                                                
Beginning balance   $ 641     $ 59     $ 759     $ 22     $ 55     $ 86     $ 2,369     $ 3,991  
Provision (credit) for loan losses     24       (6 )     (20 )     (8 )     211       (40 )     (2,261 )     (2,100 )
Charge-offs     —       —       —       —       —       (12 )     —       (12 )
Recoveries     —       —       —       12       —       8       —       20  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  

 

(continued)

 

 12 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued.

 

    Residential Real Estate     Multi-
Family Real Estate		     Commercial Real Estate     Land and Construction     Commercial     Consumer     Unallocated     Total  
At June 30, 2019:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 2,445     $ —     $ 812     $ —     $ —     $ 4,211  
Balance in allowance for loan losses   $ 268     $ —     $ —     $ —     $ 523     $ —     $ —     $ 791  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 25,634     $ 4,200     $ 44,540     $ 157     $ 3,967     $ 122     $ —     $ 78,620  
Balance in allowance for loan losses   $ 269     $ 41     $ 678     $ 1     $ 35     $ 11     $ 227     $ 1,262  
                                                                 
At December 31, 2018:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 3,861     $ —     $ 1,928     $ —     $ —     $ 6,743  
Balance in allowance for loan losses   $ 268     $ —     $ 162     $ —     $ 814     $ —     $ —     $ 1,244  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 26,250     $ 8,195     $ 32,773     $ 1,998     $ 3,069     $ 260     $ —     $ 72,545  
Balance in allowance for loan losses   $ 276     $ 88     $ 405     $ 19     $ 36     $ 25     $ 150     $ 999  

 

(continued)

 

 13 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3)

Loans, Continued.

 

The Company has divided the loan portfolio into six portfolio segments, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Company’s Board of Directors (the “Board”). The Company identifies the portfolio segments as follows: 

 

Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction. Residential real estate loans are underwritten based on repayment capacity and source, value of the underlying property, credit history and stability. The Company offers first and second one-to-four family mortgage loans; the collateral for these loans is generally the clients' owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers' financial condition. Multi-family 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 Board. Such standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Construction loans to borrowers 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, cost estimates and pre-construction sales information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for 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.

   
  Commercial. Commercial business loans and lines of credit consist of loans to small- and medium-sized companies in the Company’s market area. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Company’s commercial loans are secured loans, along with a small amount of unsecured loans. The Company’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Company seeks to minimize these risks through its underwriting standards.
   
  Consumer. 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. Risk is mitigated by the fact that the loans are of smaller individual amounts.

 

(continued)

 

 14 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued. The following summarizes the loan credit quality (in thousands):

 

    Pass     OLEM
(Other
Loans
Especially Mentioned)		     Sub-
standard		     Doubtful     Loss     Total  
At June 30, 2019:                                                
Residential real estate   $ 25,634     $ —     $ 954     $ —     $ —     $ 26,588  
Multi-family real estate     4,200       —       —       —       —       4,200  
Commercial real estate     42,814       1,726       2,445       —       —       46,985  
Land and construction     157       —       —       —       —       157  
Commercial     3,967       —       812       —       —       4,779  
Consumer     122       —       —       —       —       122  
                                                 
Total   $ 76,894     $ 1,726     $ 4,211     $ —     $ —     $ 82,831  
                                                 
At December 31, 2018:                                                
Residential real estate   $ 26,250     $ —     $ 954     $ —     $ —     $ 27,204  
Multi-family real estate     8,195       —       —       —       —       8,195  
Commercial real estate     31,050       1,723       3,861       —       —       36,634  
Land and construction     1,998       —       —       —       —       1,998  
Commercial     2,362       707       1,928       —       —       4,997  
Consumer     260       —       —       —       —       260  
                                                 
Total   $ 70,115     $ 2,430     $ 6,743     $ —     $ —     $ 79,288  

 

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 – 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 net 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. Included in this category are loans that are current on their payments, but the Bank is unable to document the source of repayment. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
   
  Doubtful – a loan classified as Doubtful has all the weaknesses inherent in one classified as 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. 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 effected in the future. The Company 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 effected in the future. The Company fully charges off any loan classified as Loss.

 

(continued)

 

 15 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(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 June 30, 2019:                                                        
Residential real estate   $ —     $ —     $ —     $ —     $ 26,588     $ —     $ 26,588  
Multi-family real estate     —       —       —       —       4,200       —       4,200  
Commercial real estate     —       —       —       —       46,985       —       46,985  
Land and construction     —       —       —       —       157       —       157  
Commercial     —       —       —       —       4,779       —       4,779  
Consumer     —       —       —       —       122       —       122  
                                                         
Total   $ —     $ —     $ —     $ —     $ 82,831     $ —     $ 82,831  

 

  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 December 31, 2018:                                                        
Residential real estate   $ —     $ —     $          —     $           —     $ 27,204     $             —     $ 27,204  
Multi-family real estate     —       —       —        —       8,195        —       8,195  
Commercial real estate     —       —       —        —       35,254       1,380       36,634  
Land and construction     —       —       —        —       1,998        —       1,998  
Commercial     —       —       —        —       4,997        —       4,997  
Consumer     —       —       —        —       260        —       260  
                                                         
Total   $        —     $         —     $ —     $  —     $ 77,908     $ 1,380      $ 79,288  

 

The following summarizes the amount of impaired loans (in thousands):

 

    At June 30, 2019     At December 31, 2018  
    Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		     Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		  
With no related allowance recorded:                                                
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 2,259     $ 2,259     $ —  
Commercial     —       —       —       1,114       1,114       —  
With related allowance recorded:                                                
Residential real estate     954       954       268       954       954       268  
Commercial real estate     —       —       —       1,602       1,602       162  
Commercial     812       812       523       814       814       814  
Total:                                                
Residential real estate   $ 954     $ 954     $ 268     $ 954     $ 954     $ 268  
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 3,861     $ 3,861     $ 162  
Commercial   $ 812     $ 812     $ 523     $ 1,928     $ 1,928     $ 814  
Total   $ 4,211     $ 4,211     $ 791     $ 6,743     $ 6,743     $ 1,244  

 

(continued)

 

 16 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(3) Loans, Continued. The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands):

 

    Three Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 954     $ 19     $ 19     $ 968     $ 19     $ 19  
Commercial real estate   $ 2,461     $ 31     $ 21     $ 226     $ 3     $ 3  
Commercial   $ 1,302     $ 20     $ 11     $ 2,287     $ 28     $ 28  
Total   $ 4,714     $ 70     $ 51     $ 3,481     $ 50     $ 50  

 

    Six Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 952     $ 37     $ 37     $ 1,000     $ 38     $ 38  
Commercial real estate   $ 3,059     $ 61     $ 59     $ 546     $ 15     $ 15  
Commercial   $ 1,548       43     $ 39     $ 1,319       45     $ 45  
Total   $ 5,559     $ 141     $ 135     $ 2,865     $ 98     $ 98  

 

  No loans have been determined to be troubled debt restructurings (TDR’s) during the three and six month periods ended June 30, 2019 or 2018. At June 30, 2019 and 2018, there were no loans modified and entered into TDR’s within the past twelve months, that subsequently defaulted during the three and six month periods ended June 30, 2019 or 2018.

 

(continued)

 

 17 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(4) (Loss) Earnings Per Share. Basic (loss) earnings per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. During the three and six month periods ended June 30, 2019, basic and diluted loss per share is the same due to the net loss incurred by the Company. During the three and six month periods ended June 30, 2018, basic and diluted earnings per share is the same as there were no outstanding potentially dilutive securities. (Loss) earnings per common share have been computed based on the following:

 

    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
    2019     2018     2019     2018  
Weighted-average number of common shares outstanding used to calculate basic and diluted loss per common share     1,881,759       1,409,904       1,869,933       1,292,381  

 

(continued)

 

 18 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(5) Stock-Based Compensation. The Company is authorized to grant stock options, stock grants and other forms of equity-based compensation under its 2011 Equity Incentive Plan as amended (the “2011 Plan”) and its 2018 Equity Incentive Plan (the “2018 Plan”). Both plans have been approved by shareholders. The Company is authorized to issue up to 210,000 shares of common stock under the 2011 Plan of which all have been issued, and up to 250,000 shares of common stock under the 2018 Plan, of which 157,190 have been issued, and 92,810 shares remain available for grant.
   
  The Company’s only grants under the 2011 Plan have been the issuance of shares of common stock to directors for director’s fees and compensation for services rendered. As of April 1, 2017, the Company discontinued the issuance of common stock as a method of payment of director’s fees.
   
  During 2018, the sale of 20,814 shares of common stock to a director of the Company, and the issuance of 79,186 shares of common stock in exchange for 7 shares of the Company’s preferred stock held by a director in April 2018, were treated as grants under the 2018 Plan. Please refer to the Company’s Forms 8-K filed with the Securities and Exchange Commission on November 16, 2018 and January 10, 2019 for further details.
   
  During the year ended December 31, 2017, the Company accrued compensation expense of $8,858 with respect to 2,821 shares to be issued to directors at a value of $3.14 per share on account of director’s fees accrued during the first quarter of 2017. These shares were issued in 2018.
   
  During the year ended December 31, 2018, the Company accrued compensation expense of $200,000 with respect to 36,101 shares issued to a director for services performed in 2018. The Company had previously accrued compensation expense of $200,000 in 2016 and 2017 for services performed. The Company had previously agreed to issue 105,820 shares to this director for services performed in 2016 and 2017. All shares were issued in 2018.
   
  During the three month period ended June 30, 2019, the Company recorded compensation expense of $200,000 with respect to 58,309 shares issued to a director for services performed.

 

(6) Fair Value Measurements. Impaired collateral-dependent loans are carried at fair value when the current collateral value is lower than the carrying value of the loan. Those impaired collateral-dependent loans which are measured at fair value on a nonrecurring basis are as follows (in thousands):

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the Six Month period ended

June 30, 2019

  
At June 30, 2019 —                                                
Residential real estate   $ 686     $ —     $ —     $ 686     $ 268     $ —  

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the year ended

December 31, 2018

  
At December 31, 2018:                                                
Residential real estate   $ 686     $  —     $ —     $ 686     $ 268     $       —  
Commercial real estate     1,312       —       —       1,312       71       —  
    $ 1,998     $ —     $ —     $ 1,998     $ 339     $ —  

 

Available-for-sale securities measured at fair value on a recurring basis are summarized below (in thousands):

 

    Fair Value Measurements Using  
   

Fair

Value

    

Quoted Prices

In Active Markets for Identical Assets

(Level 1)

    

Significant Other Observable Inputs

(Level 2)

    

Significant

Unobservable

Inputs

(Level 3)

  
                                 
At June 30, 2019:                              
SBA Pool Securities   $ 2,058     $ —     $ 2,058     $ —  
Collateralized mortgage obligations     1,212       —       1,212       —  
Mortgage-backed Securities     2,943       —       2,943       —  
    $ 6,213     $ —     $ 6,213     $ —  
                                 
At December 31, 2018:                                
SBA Pool Securities   $ 2,359     $ —     $ 2,359     $ —  

 

During the three and six month periods ended June 30, 2019 and 2018, no securities were transferred in or out of Levels 1, 2 or 3.

 

(continued)

 

 19 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(7) 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 June 30, 2019   At December 31, 2018
   

Carrying

Amount

    

Fair

Value

     Level  

Carrying

Amount

    

Fair

Value

     Level
Financial assets:                                        
Cash and cash equivalents   $ 12,317     $ 12,317     1   $ 7,983     $ 7,983     1
Securities available for sale     6,213       6,213     2     2,359       2,359     2
Securities held-to-maturity     6,632       6,874     2     7,139       7,175     2
Loans     80,861       80,544     3     77,200       77,062     3
Federal Home Loan Bank stock     642       642     3     1,132       1,132     3
Accrued interest receivable     370       370     3     314       314     3
                                         
Financial liabilities:                                        
Deposit liabilities     85,901       85,847     3     62,378       62,243     3
Federal Home Loan Bank advances     13,000       12,807     3     24,600       24,437     3
Junior subordinated debenture     5,155       N/A (1)   3     5,155       N/A (1)   3
Federal funds purchased     —       —     N/A     560       560     3
Off-balance sheet financial instruments     —       —     N/A     —       —     N/A

 

(1) The Company is unable to determine value based on significant unobservable inputs required in the calculation. Refer to Note 10 for further information.
   
(8) Off- Balance Sheet Financial Instruments. The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit, unused lines of credit, and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed consolidated balance sheet. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

 

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

 

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the counterparty.

 

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit to customers is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments. Standby letters of credit generally have expiration dates within one year.

 

Commitments to extend credit, unused lines of credit, and standby letters of credit typically result in loans with a market interest rate when funded. A summary of the contractual amounts of the Company’s financial instruments with off-balance-sheet risk at June 30, 2019 follows (in thousands):

 

Commitments to extend credit   $ 3,894  
         
Unused lines of credit   $ 2,962  
         
Standby letters of credit   $ —  

 

(9) Regulatory Matters. The Bank is subject to various regulatory capital requirements administered by the bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
   
  The Bank, is subject to the Basel III capital level threshold requirements under the Prompt Corrective Action regulations with full compliance phased in over a multi-year schedule. These new regulations were designed to ensure that banks maintain strong capital positions even in the event of severe economic downturns or unforeseen losses.
   
  The Bank is subject to the capital conservation buffer rules which place limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers. In order to avoid these limitations, an institution must hold a capital conservation buffer above its minimum risk-based capital requirements. As of June 30, 2019, the Bank’s capital conservation buffer exceeds the minimum requirements of 2.50%.

 

(continued)

 

 20 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

(9)

Regulatory Matters, Continued.

 

The following table shows the Bank’s capital amounts and ratios and regulatory thresholds at June 30, 2019 and December 31, 2018 (dollars in thousands):

 

    Actual    

For Capital

Adequacy Purposes

    

Minimum

To Be Well

Capitalized Under

Prompt Corrective

Action Provisions

  
    Amount     %     Amount     %     Amount     %  
As of June 30, 2019:                                                
Total Capital to Risk-Weighted Assets   $ 12,193       14.61 %   $ 6,676       8.00 %   $ 8,344       10.00 %
Tier I Capital to Risk-Weighted Assets     11,138       13.35       5,007       6.00       6,626       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,138       13.35       3,755       4.50       5,424       6.50  
Tier I Capital to Total Assets     11,138       10.31       4,323       4.00       5,404       5.00  
                                                 
As of December 31, 2018:                                                
Total Capital to Risk-Weighted Assets   $ 12,155       15.86 %   $ 6,132       8.00 %   $ 7,665       10.00 %
Tier I Capital to Risk-Weighted Assets     11,181       14.59       4,599       6.00       6,132       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,181       14.59       3,449       4.50       4,983       6.50  
Tier I Capital to Total Assets     11,181       11.68       3,828       4.00       4,785       5.00  

 

(continued)

 

 21 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

 

Memorandum of Understanding. On August 28, 2018, the Bank agreed to the issuance of a Memorandum of Understanding (the “MOU”), with the FDIC and Florida Office of Financial Regulation which required the Bank to take certain measures to improve its safety and soundness. By agreeing to the MOU, the Bank was released from the Consent Order that became effective in 2016, including the restrictions on the interest rates paid on deposits.

 

Pursuant to the MOU, the Bank was required to take certain measures to maintain qualified management, improve its strategic planning and budgeting process, strengthen the interest rate management practices, limit its asset growth and provide for the ongoing organization, monitoring and operational administration of the Bank Secrecy Act Program. The MOU prohibited the payment of dividends by the Bank.

 

During the recent examinations, the examiners noted the Bank was in full compliance with the provisions of the MOU. In June 2019, the Bank was released from the MOU.

 

Company Written Agreement with Federal Reserve Bank of Atlanta (“FRB”). On June 22, 2010, the Company and the FRB entered into a Written Agreement with respect to certain aspects of the operation and management of the Company. The Written Agreement prohibits, without the prior approval of the FRB, the payment of cash dividends, taking dividends or payments from the Bank, making any interest, principal or other distributions on account of the Debenture, incurring, increasing or guaranteeing any debt, purchasing or redeeming any shares of stock, or appointing any new director or senior executive officer. Management believes that the Company is in substantial compliance with the requirements of the Written Agreement.

 

(10) Junior Subordinated Debenture. On September 30, 2004, the Company issued a $5,155,000 Junior Subordinated Debenture (the “Debenture”) to Optimum Bank Holdings Capital Trust I, a Delaware statutory trust formed by the Company for the purpose of issuing and selling certain securities (the “Trust Preferred Securities”) representing undivided beneficial interests in the Debenture. The trust issued a total of 5,000 Trust Preferred Securities. The Debenture has a term of thirty years. The interest rate was fixed at 6.40% for the first five years, and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (4.77% at June 30, 2019). The Debenture is redeemable in certain circumstances. The terms of the Debenture 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 consecutive quarterly periods.
   
  Beginning in 2010, the Company exercised its right to defer payment of interest on the Debenture. Interest payments deferred as of June 30, 2019 totaled $1,864,000. The Company has deferred interest payments with respect to the Debenture for the maximum allowable twenty consecutive quarterly payments. The Company is in default under the Debenture due to its failure to make required interest payments. The Trustee for the Debenture and the beneficial owners of the Debenture can accelerate the $5,155,000 principal balance plus accrued and unpaid interest, as a result of this default. To date, neither the Trustee nor the holders have accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty. Under the Written Agreement, the Company is not able to make any interest or principal payments without the prior approval of the FRB.
   
  In May 2018, a company affiliated with a director of the Company (the “New Holder”) purchased all 5,000 Trust Preferred Securities from a third party. During the third quarter of 2018, the New Holder sold its rights in 694 of the Trust Preferred Securities to several unaffiliated third parties, who subsequently exchanged these Trust Preferred Securities for 301,778 shares of the Company’s common stock. Under the Written Agreement the exchange of Trust Preferred Securities for the Company’s common stock cannot reduce the principal amount of the Debenture collateralizing the Trust Preferred Securities. Accordingly, the transaction was recorded as an increase in the Company’s equity interest in the unconsolidated subsidiary trust, presented in “Other Assets” in the accompanying condensed consolidated balance sheets.
   
  Although the Company and the New Holder have not executed a formal, definitive bilateral agreement, the New Holder has provided the Company with written representations that the New Holder will not accelerate and demand payment of any of the remaining 4,306 Trust Preferred Securities principal or accrued interest within twelve months from August 13, 2019, the date the Company’s Form 10-Q as of and for the period ended June 30, 2019, was filed with the Securities and Exchange Commission.
   
(11) Branch Relocation. In June 2019, the Company entered into a sales contract to sell one of its branch locations for $1,400,000. The Company will finance $1,050,000 of the total sales price. Also in June 2019, the Company entered into a lease agreement for the purpose of relocating the aforementioned branch.
   
  The Company has requested regulatory approval for the branch relocation. The lease commencement date shall occur upon receiving approval from the regulators, but will start no later than 120 days from the date the lease agreement was executed in June 2019. The sale closing will occur within two weeks of Company vacating the building.

 

 22 

 

 

(12) Lease. We adopted ASU 2016-02, Leases on January 1, 2019, which resulted in the recognition of one operating lease on the condensed consolidated balance sheet in 2019 and forward. See Note 1 – Recent Pronouncements for more information on the adoption of the ASU. We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the adoption date. The right-of-use asset and lease liability is disclosed below and are included in the caption “Other assets” and “Other liabilities”, respectively, in the accompanying condensed consolidated balance sheet. As our lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease agreements that have lease and non-lease components, are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.
   
  The Company’s operating lease obligation is for one of the Company’s branch locations. Our lease has a remaining lease term of approximately 3.4 years and does not offer an option to extend the lease. The components of lease expense and other lease information are as follows (in thousands):

 

   Three Month Period Ended June 30, 2019   Six Month Period Ended June 30, 2019 
         
Operating Lease Cost  $19   $38 
Cash paid for amounts included in measurement of lease liabilities  $18   $36 

 

   At June 30, 2019 
      
Operating lease right-of-use asset  $246 
Operating lease liability  $248 
Weighted-average remaining lease term   3.4 years 
Weighted-average discount rate   2.6%

 

Future minimum lease payments under non-cancellable leases, reconciled to our discounted operating lease liability is as follows (in thousands):

 

   At June 30, 2019 
Remainder of 2019  $36 
2020  $75 
2021  $77 
2022  $72 
Total future minimum lease payments  $260 
Less imputed interest  $(12)
Total operating lease liability   248 

 

 23 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto presented elsewhere in this report. For additional information, refer to the consolidated financial statements and footnotes for the year ended December 31, 2018 in the Annual Report on Form 10-K.

 

The following discussion and analysis should also be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this report. This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond the control of the Company, including adverse changes in economic, political and market conditions, losses from the Company’s lending activities and changes in market conditions, the possible loss of key personnel, the impact of increasing competition, the impact of changes in government regulation, the possibility of liabilities arising from violations of federal and state securities laws and the impact of changes in technology in the banking industry. Although the Company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the Company’s actual results will not differ materially from any results expressed or implied by the Company’s forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance.

 

(continued)

 

 24 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Memorandum of Understanding. On August 28, 2018, the Bank agreed to the issuance of a Memorandum of Understanding (the “MOU”), with the FDIC and OFR which required the Bank to take certain measures to improve its safety and soundness. By agreeing to the MOU, the Bank was released from the Consent Order that became effective in 2016, including the restrictions on the interest rates paid on deposits.

 

Pursuant to the MOU, the Bank was required to take certain measures to maintain qualified management, improve its strategic planning and budgeting process, strengthen the interest rate management practices, limit its asset growth and provide for the ongoing organization, monitoring and operational administration of the Bank Secrecy Act Program. The MOU prohibited the payment of dividends by the Bank.

 

During the recent examination, the examiners noted the Bank was in full compliance with the provisions of the MOU. In June 2019, the Bank was released from the MOU.

 

Company Written Agreement with Federal Reserve Bank of Atlanta (“FRB”). On June 22, 2010, the Company and the FRB entered into a Written Agreement with respect to certain aspects of the operation and management of the Company. The Written Agreement prohibits, without the prior approval of the FRB, the payment of dividends, taking dividends or payments from the Bank, making any interest, principal or other distributions on account of the Debenture, incurring, increasing or guaranteeing any debt, purchasing or redeeming any shares of stock, or appointing any new director or senior executive officer. Management believes that the Company is in substantial compliance with the requirements of the Written Agreement.

 

Capital Levels

 

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios of Total and Tier 1 capital to risk-weighted assets and Tier 1 capital to average assets. As of June 30, 2019, the Bank met the minimum applicable capital adequacy requirements.

 

Refer to Note 9 for the Bank’s actual and required minimum capital ratios.

 

 25 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Financial Condition at June 30, 2019 and December 31, 2018

 

Overview

 

The Company’s total assets increased by approximately $11.1 million to $111.3 million at June 30, 2019, from $100.1 million at December 31, 2018, primarily due to an increase in total deposits offset by a decrease in Federal Home Loan Bank advances. Total stockholders’ equity decreased by approximately $300,000 to $5.0 million at June 30, 2019, from $5.3 million at December 31, 2018, primarily due to the net loss for the six month period ended June 30, 2019, offset by common stock issued as compensation to one director during 2019.

 

The following table shows selected information for the dates indicated:

 

   

Six Month Period

Ended

June 30, 2019

    

Year Ended

December 31, 2018

  
             
Average equity as a percentage of average assets     4.8 %     4.4 %
                 
Equity to total assets at end of period     4.5 %     5.3 %
                 
Return on average assets (1)     (1.1 )%     0.9 %
                 
Return on average equity (1)     (22.5 )%     19.8 %
                 
Noninterest expenses to average assets (1)     4.3 %     4.4 %

 

 

(1) Annualized for the six month period ended June 30, 2019.

 

 26 

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Liquidity and Sources of Funds

 

The Company’s sources of funds include customer deposits, advances from the Federal Home Loan Bank of Atlanta (“FHLB”), principal repayments and sales of investment securities, loan repayments, foreclosed real estate sales, the use of Federal Funds markets, net earnings, if any, and loans taken out at the Federal Reserve Bank discount window.

 

Deposits are our primary source of funds. In order to increase its core deposits, the Company has priced its deposit rates competitively. The Company will adjust rates on its deposits to attract or retain deposits as needed.

 

The Bank increased deposits by $23.5 million during the six month period ended June 30, 2019. The proceeds were used to paydown FHLB Advances and listing service Certificates of deposits.

 

In addition to obtaining funds from depositors, we may borrow funds from other financial institutions. At June 30, 2019, the Company had outstanding borrowings of $13.0 million, against its $26.6 million in established borrowing capacity with the FHLB. The Company’s borrowing facility is subject to collateral and stock ownership requirements, as well as prior FHLB consent to each advance. The Bank has an available discount window credit line with the Federal Reserve Bank, currently $430,000. The Federal Reserve Bank line is subject to collateral requirements and must be repaid within 90 days; each advance is subject to prior Federal Reserve Bank consent. At June 30, 2019, the Company also had lines of credit amounting to $8.4 million with three correspondent banks to purchase federal funds. The Company had no outstanding federal funds purchased at June 30, 2019 and $560,000 outstanding at December 31, 2018. Disbursements on the lines of credit are subject to the approval of the correspondent banks. We measure and monitor our liquidity daily and believe our liquidity sources are adequate to meet our operating needs.

 

Off-Balance Sheet Arrangements

 

Refer to Note 8 for Off-Balance Sheet Arrangements.

 

Junior Subordinated Debenture

 

Refer to Note 10 regarding the Junior Subordinated Debenture.

 

 27 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Results of Operations

 

The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest and dividend income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost; (iii) net interest income; (iv) interest-rate spread; (v) net interest margin; and (vi) the ratio of average interest-earning assets to average interest-bearing liabilities.

 

    Three Months Ended June 30,  
    2019     2018  
          Interest     Average           Interest     Average  
    Average     and     Yield/     Average     and     Yield/  
    Balance     Dividends     Rate(5)     Balance     Dividends     Rate(5)  
Interest-earning assets:                                                
Loans   $ 81,325     $ 1,097       5.40 %   $ 72,602     $ 938       5.17 %
Securities     12,954       72       2.22       10,758       73       2.71  
Other (1)     10,199       77       3.02       4,552       32       2.81  
                                                 
Total interest-earning assets/interest income     104,478       1,246       4.81       87,912       1,043       4.75  
                                                 
Cash and due from banks     2,149                       1,356                  
Premises and equipment     2,644                       2,688                  
Other     (912 )                     (2,152 )                
                                                 
Total assets   $ 108,359                     $ 89,804                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 43,329       199       1.84     $ 21,123       33       0.62  
Time deposits     28,956       161       2.22       19,693       62       1.26  
Borrowings (2)     18,155       133       2.93       30,577       190       2.49  
                                                 
Total interest-bearing liabilities/interest expense     90,440       493       2.18       71,393       285       1.60  
                                                 
Noninterest-bearing demand deposits     10,860                       12,510                  
Other liabilities     2,017                       2,388                  
Stockholders’ equity     5,042                       3,513                  
                                                 
Total liabilities and stockholders’ equity   $ 108,359                     $ 89,804                  
                                                 
Net interest income           $ 753                     $ 758          
                                                 
Interest rate spread (3)                     2.63 %                     3.15 %
                                                 
Net interest margin (4)                     2.89 %                     3.45 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.16 %                     1.23 %                

 

    Six Months Ended June 30,  
    2019     2018  
          Interest     Average           Interest     Average  
    Average     and     Yield/     Average     and     Yield/  
    Balance     Dividends     Rate(5)     Balance     Dividends     Rate(5)  
Interest-earning assets:                                                
Loans   $ 81,445     $ 2,187       5.37 %   $ 72,102     $ 1,854       5.14 %
Securities     10,787       122       2.26       11,182       134       2.40  
Other (1)     9,824       125       2.54       5,666       67       2.36  
                                                 
Total interest-earning assets/interest income     102,056       2,434       4.77       88,950       2,055       4.62  
                                                 
Cash and due from banks     2,239                       1,409                  
Premises and equipment     2,648                       2,669                  
Other     (1,100 )                     (2,941 )                
                                                 
Total assets   $ 105,843                     $ 90,087                  
                                                 
Interest-bearing liabilities:                                                
Savings, NOW and money-market deposits   $ 39,274       289       1.47     $ 21,143       67       0.63  
Time deposits     28,174       360       2.56       22,820       140       1.23  
Borrowings (2)     19,855       283       2.85       28,335       338       2.39  
                                                 
Total interest-bearing liabilities/interest expense     87,303       932       2.14       72,298       545       1.51  
                                                 
Noninterest-bearing demand deposits     11,352                       12,389                  
Other liabilities     2,059                       2,337                  
Stockholders’ equity     5,129                       3,063                  
                                                 
Total liabilities and stockholders’ equity   $ 105,843                     $ 90,087                  
                                                 
Net interest income           $ 1,502                     $ 1,510          
                                                 
Interest rate spread (3)                     2.63 %                     3.11 %
                                                 
Net interest margin (4)                     2.94 %                     3.40 %
                                                 
Ratio of average interest-earning assets to average interest-bearing liabilities     1.17 %                     1.23 %                

 

(1) Includes interest-earning deposits with banks and Federal Home Loan Bank stock dividends.
(2) Includes Federal Home Loan Bank advances, other borrowings and the Debenture.
(3) Interest-rate spread represents the difference between the average yield on interest-earning assets and the average cost of interest-bearing liabilities.
(4) Net interest margin is net interest income divided by average interest-earning assets.
(5) Annualized.

 

 28 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Continued)

 

Comparison of the Three-Month Periods Ended June 30, 2019 and 2018

 

General. Net loss for the three month period ended June 30, 2019, was $(430,000) or $(.23) per basic and diluted share compared to net earnings of $1,904,000 or $1.35 per basic and diluted share for the three month period ended June 30, 2018. The substantial earnings in 2018 were due to the $2.1 million reversal of the Company’s allowance for loan losses.

 

Interest Income. Interest income increased $203,000 to $1.2 million for the three month period ended June 30, 2019 compared to $1.0 million for the three month period ended June 30, 2018. The increase in interest income was caused primarily by the increase in loans of $3.5 million.

 

Interest Expense. Interest expense on deposits and borrowings increased to $493,000 for the three month period ended June 30, 2019 from $285,000 for the three month period ended June 30, 2018. The Bank continued to attract local deposits during 2019.

 

Provision for Loan Losses. There was no provision or credit for losses during the three month period ended June 30, 2019. The Bank reversed $2.1 million of the allowance for loan losses into income during the second quarter of 2018. The provision or credit for loan losses is charged to operations as losses are estimated to have occurred in order to bring the total allowance for loan losses to a level deemed appropriate by management to absorb losses inherent in the portfolio at June 30, 2019 and 2018. Management’s periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, loans identified as impaired, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for loan losses totaled $2.1 million or 2.47% of loans outstanding at June 30, 2019, as compared to $2.2 million or 2.83% of loans outstanding at December 31, 2018.

 

Noninterest Income. Total noninterest income increased to $87,000 for the three month period ended June 30, 2019, from $35,000 for the three month period ended June 30, 2018 due to loan related fees.

 

Noninterest Expenses. Total noninterest expenses increased $281,000 to $1,270,000 for the three month period ended June 30, 2019 compared to $989,000 for the three month period ended June 30, 2018.

 

Comparison of the Six-Month Periods Ended June 30, 2019 and 2018

 

General. Net loss for the six month period ended June 30, 2019, was $(576,000) or $(.31) per basic and diluted share compared to net earnings of $1,619,000 or $1.25 per basic and diluted share for the six month period ended June 30, 2018. The substantial earnings in 2018 were due to the $2.1 million reversal of the Company’s allowance for loan losses.

 

Interest Income. Interest income increased to $2,434,000 for the six month period ended June 30, 2019 from $2,055,000 for the six month period ended June 30, 2018, primarily due to an increase in interest earning assets.

 

Interest Expense. Interest expense on deposits and borrowings increased $387,000 to $932,000 for the six month period ended June 30, 2019 compared to the prior period. The increase in interest expense was caused by the net effect of an increase in deposits and a decrease in borrowings.

 

Provision for Loan Losses. There was no provision or credit for losses during the six month period ended June 30, 2019. The Bank reversed $2.1 million of the allowance for loan losses into income during the second quarter of 2018. The provision or credit for loan losses is charged to operations as losses are estimated to have occurred in order to bring the total allowance for loan losses to a level deemed appropriate by management to absorb losses inherent in the portfolio at June 30, 2019 and 2018. Management’s periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, loans identified as impaired, general economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. The allowance for loan losses totaled $2.1 million or 2.47% of loans outstanding at June 30, 2019, as compared to $2.2 million or 2.83% of loans outstanding at December 31, 2018.

 

Noninterest Income. Total noninterest income increased by $75,000 for the six month period ended June 30, 2019, to $124,000 compared to $49,000 for the six month period ended June 30, 2018 due to increased loan related fees.

 

Noninterest Expenses. Total noninterest expenses increased $214,000 to $2.3 million for the six month period ended June 30, 2019 compared to $2.0 million for the six month period ended June 30, 2018.

 

 29 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

Item 4. Controls and Procedures

 

The Company’s management evaluated the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report, and, based on this evaluation, the Principal Executive Officer and Principal Financial Officer concluded that these disclosure controls and procedures are effective.

 

There have been no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

 

PART II. OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three month period ended June 30, 2019, the Company recorded compensation expense of $200,000 with respect to 58,309 shares issued to a director for services performed.

 

Item 3. Defaults Upon Senior Securities

 

Previously disclosed.

 

Item 4. Mine Safety Disclosures

 

None

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 

The exhibits contained in the Exhibit Index following the signature page are filed with or incorporated by reference into this report.

 

 30 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  OPTIMUMBANK HOLDINGS, INC.
  (Registrant)
     
Date: August 14, 2019 By: /s/ Timothy Terry
    Timothy Terry,
    Principal Executive Officer
     
  By: /s/ David L. Edgar
    David L. Edgar,
    Principal Financial Officer

 

 31 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

EXHIBIT INDEX

 

Exhibit
No.		   Description
     
3   Articles of Incorporation, as amended.
     
31.1   Certification of Principal Executive Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
     
31.2   Certification of Principal Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
     
32.1   Certification of Principal Executive Officer
     
32.2   Certification of Principal Financial Officer

 

 32 
 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

 

EXHIBIT INDEX

 

Exhibit
No.		   Description
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document

 

 33 
 

 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

   
 

 

 

 

EXHIBIT 31.1

 

CERTIFICATION OF THE PRINCIPAL EXECUTIVE OFFICER

REQUIRED BY RULE 13A-14(A)/15D-14(A)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: August 14, 2019

 

 
 

 

EXHIBIT 31.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

REQUIRED BY RULE 13A-14(A)/15D-14(A)

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

I certify that:

 

1. I have reviewed this report on Form 10-Q of OptimumBank Holdings, Inc. (the “Company”);
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within that entity, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the Audit Committee of the Company’s Board of Directors:

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

  /s/ David L. Edgar
  David L. Edgar
  Principal Financial Officer
  Date: August 14, 2019

 

 
 

 

EXHIBIT 32.1

 

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2019 as filed with the Securities and Exchange Commission (the “Report”), I, as the Principal Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

 

  /s/ Timothy Terry
  Timothy Terry
  Principal Executive Officer
  Date: August 14, 2019

 

 
 

 

EXHIBIT 32.2

 

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADDED BY

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of OptimumBank Holdings, Inc. (the “Company”) on Form 10-Q for the six months ended June 30, 2019 as filed with the Securities and Exchange Commission (the “Report”), I, as the Principal Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as added by § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  2. To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

 

  /s/ David L. Edgar
  David L. Edgar
  Principal Financial Officer
  Date: August 14, 2019

 

 
 

v3.19.2
Document and Entity Information - shares
 6 Months Ended
Jun. 30, 2019
Aug. 14, 2019
Document And Entity Information    
Entity Registrant Name OptimumBank Holdings, Inc.  
Entity Central Index Key 0001288855  
Document Type 10-Q  
Document Period End Date Jun. 30, 2019  
Amendment Flag false  
Current Fiscal Year End Date --12-31  
Entity Reporting Status Current Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business Flag true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   1,928,776
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2019  
v3.19.2
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Assets:    
Cash and due from banks $ 1,853 $ 1,934
Interest-bearing deposits with banks 10,464 6,049
Total cash and cash equivalents 12,317 7,983
Securities available for sale 6,213 2,359
Securities held-to-maturity (fair value of $6,874 and $7,175) 6,632 7,139
Loans, net of allowance for loan losses of $2,053 and $2,243 80,861 77,200
Federal Home Loan Bank stock 642 1,132
Premises and equipment, net 2,676 2,668
Accrued interest receivable 370 314
Other assets 1,559 1,350
Total assets 111,270 100,145
Liabilities:    
Noninterest-bearing demand deposits 10,925 9,638
Savings, NOW and money-market deposits 45,588 26,682
Time deposits 29,388 26,058
Total deposits 85,901 62,378
Federal Home Loan Bank advances 13,000 24,600
Federal funds purchased 560
Junior subordinated debenture 5,155 5,155
Official checks 142 274
Other liabilities 2,028 1,872
Total liabilities 106,226 94,839
Commitments and contingencies (Notes 8, 10, 11 and 12)
Stockholders' equity:    
Preferred stock, no par value; 6,000,000 shares authorized: Designated Series A, no par value, $25,000 liquidation value per share, no shares issued and outstanding
Common stock, $.01 par value; 5,000,000 shares authorized, 1,927,579 shares issued and outstanding in 2019 and 1,858,020 shares issued and outstanding in 2018 19 18
Additional paid-in capital 36,356 36,128
Accumulated deficit (31,086) (30,510)
Accumulated other comprehensive loss (245) (330)
Total stockholders' equity 5,044 5,306
Total liabilities and stockholders' equity $ 111,270 $ 100,145
v3.19.2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Securities held to maturity, fair value $ 6,874 $ 7,175
Loans, allowance for loan losses $ 2,053 $ 2,243
Preferred stock, par value
Preferred stock, shares authorized 6,000,000 6,000,000
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 5,000,000 5,000,000
Common stock, shares issued 1,927,579 1,858,020
Common stock, shares outstanding 1,927,579 1,858,020
Designated Series A Preferred Stock [Member]    
Preferred stock, par value
Preferred stock liquidation value per share $ 25,000 $ 25,000
Preferred stock, shares issued
Preferred stock, shares outstanding
v3.19.2
Condensed Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Interest income:        
Loans $ 1,097 $ 938 $ 2,187 $ 1,854
Securities 72 73 122 134
Other 77 32 125 67
Total interest income 1,246 1,043 2,434 2,055
Interest expense:        
Deposits 360 95 649 207
Borrowings 133 190 283 338
Total interest expense 493 285 932 545
Net interest income 753 758 1,502 1,510
Credit for loan losses 2,100 2,100
Net interest income after credit for loan losses 753 2,858 1,502 3,610
Noninterest income:        
Service charges and fees 68 90 9
Other 19 35 34 40
Total noninterest income 87 35 124 49
Noninterest expenses:        
Salaries and employee benefits 529 460 1,030 898
Professional fees 128 158 227 223
Occupancy and equipment 134 102 247 206
Data processing 129 99 253 176
Insurance 18 26 42 50
Regulatory assessment 18 39 22 78
Other 314 105 433 409
Total noninterest expenses 1,270 989 2,254 2,040
Net (loss) earnings before income tax benefit (430) 1,904 (628) 1,619
Income tax benefit (52)
Net (loss) earnings $ (430) $ 1,904 $ (576) $ 1,619
Net (loss) earnings per share - Basic and diluted $ (0.23) $ 1.35 $ (0.31) $ 1.25
v3.19.2
Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Income Statement [Abstract]        
Net (loss) earnings $ (430) $ 1,904 $ (576) $ 1,619
Change in unrealized gain (loss) on securities:        
Unrealized gain arising during the period 68 346 74 282
Amortization of unrealized loss on securities transferred to held-to-maturity 23 6 39 6
Reclassification adjustment for unrealized loss on securities transferred to held-to-maturity (432) (432)
Other comprehensive income (loss) before income tax (expense) benefit 91 (80) 113 (144)
Deferred income tax (expense) benefit on above change (23) 20 (28) 38
Total other comprehensive income (loss) 68 (60) 85 (106)
Comprehensive (loss) income $ (362) $ 1,844 $ (491) $ 1,513
v3.19.2
Condensed Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)
$ in Thousands
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Deficit [Member]
Accumulated Other Comprehensive Loss [Member]
Total
Balance beginning at Dec. 31, 2017 $ 11 $ 34,090 $ (31,306) $ (250) $ 2,545
Balance beginning, shares at Dec. 31, 2017 7 1,120,947        
Proceeds from Sale of Common Stock 46 46
Proceeds from Sale of Common Stock, shares 20,814        
Common stock issued as compensation to directors $ 1 614 615
Common stock issued as compensation to directors, shares 144,742        
Net earnings (loss) (285) (285)
Net change in unrealized loss on securities available for sale, net of income taxes benefit (47) (47)
Balance ending at Mar. 31, 2018 $ 12 34,750 (31,591) (297) 2,874
Balance ending, shares at Mar. 31, 2018 7 1,286,503        
Balance beginning at Dec. 31, 2017 $ 11 34,090 (31,306) (250) 2,545
Balance beginning, shares at Dec. 31, 2017 7 1,120,947        
Net earnings (loss)           1,619
Balance ending at Jun. 30, 2018 $ 15 35,105 (29,687) (356) 5,077
Balance ending, shares at Jun. 30, 2018 1,508,892        
Balance beginning at Dec. 31, 2017 $ 11 34,090 (31,306) (250) 2,545
Balance beginning, shares at Dec. 31, 2017 7 1,120,947        
Balance ending at Dec. 31, 2018 $ 18 36,128 (30,510) (330) 5,306
Balance ending, shares at Dec. 31, 2018 1,858,020        
Balance beginning at Mar. 31, 2018 $ 12 34,750 (31,591) (297) 2,874
Balance beginning, shares at Mar. 31, 2018 7 1,286,503        
Proceeds from Sale of Common Stock $ 2 356 358
Proceeds from Sale of Common Stock, shares 143,203        
Common stock issued in exchange for Preferred Stock $ 1 (1)
Common stock issued in exchange for Preferred Stock, shares (7) 79,186        
Net earnings (loss) 1,904 1,904
Net change in unrealized loss on securities available for sale, net of income taxes benefit 259 259
Amortization of unrealized loss on securities transferred to held-to-maturity 6 6
Unrealized loss on securities transferred to held to maturity, net of income tax benefit (324) (324)
Balance ending at Jun. 30, 2018 $ 15 35,105 (29,687) (356) 5,077
Balance ending, shares at Jun. 30, 2018 1,508,892        
Balance beginning at Dec. 31, 2018 $ 18 36,128 (30,510) (330) 5,306
Balance beginning, shares at Dec. 31, 2018 1,858,020        
Net earnings (loss) (146) (146)
Net change in unrealized loss on securities available for sale, net of income taxes benefit 3 3
Amortization of unrealized loss on securities transferred to held-to-maturity 14 14
Balance ending at Mar. 31, 2019 $ 18 36,128 (30,656) (313) 5,177
Balance ending, shares at Mar. 31, 2019 1,858,020        
Balance beginning at Dec. 31, 2018 $ 18 36,128 (30,510) (330) 5,306
Balance beginning, shares at Dec. 31, 2018 1,858,020        
Net earnings (loss)           (576)
Balance ending at Jun. 30, 2019 $ 19 36,356 (31,086) (245) 5,044
Balance ending, shares at Jun. 30, 2019 1,927,579        
Balance beginning at Mar. 31, 2019 $ 18 36,128 (30,656) (313) 5,177
Balance beginning, shares at Mar. 31, 2019 1,858,020        
Common stock issued as compensation to directors $ 1 200 201
Common stock issued as compensation to directors, shares 58,309        
Net earnings (loss) (430) (430)
Net change in unrealized loss on securities available for sale, net of income taxes benefit 53 53
Amortization of unrealized loss on securities transferred to held-to-maturity 15 15
Common stock issued and reclassified from other liabilities 28 28
Common stock issued and reclassified from other liabilities, shares 11,250        
Balance ending at Jun. 30, 2019 $ 19 $ 36,356 $ (31,086) $ (245) $ 5,044
Balance ending, shares at Jun. 30, 2019 1,927,579        
v3.19.2
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Cash flows from operating activities:    
Net (loss) earnings $ (576) $ 1,619
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities:    
Depreciation and amortization 86 71
Credit for loan losses (2,100)
Common stock issued as compensation to directors 201
Net amortization of fees, premiums and discounts 94 116
Increase in accrued interest receivable (56) (12)
Increase in other assets (237) (3)
Increase in official checks and other liabilities 52 623
Net cash (used in) provided by operating activities (436) 314
Cash flows from investing activities:    
Purchase of securities available for sale (4,153)
Principal repayments of securities available for sale 339 558
Principal repayments of securities held-to-maturity 527 186
Net increase in loans (3,702) (814)
Purchases of premises and equipment (94) (105)
Redemption (purchase) of FHLB stock 490 (236)
Net cash used in investing activities (6,593) (411)
Cash flows from financing activities:    
Net increase (decrease) in deposits 23,523 (13,692)
Net decrease in federal funds purchased (560)
Net (decrease) increase in FHLB Advances (11,600) 6,050
Proceeds from sale of common stock 404
Net cash provided by (used in) financing activities 11,363 (7,238)
Net increase (decrease) in cash and cash equivalents 4,334 (7,335)
Cash and cash equivalents at beginning of the period 7,983 11,665
Cash and cash equivalents at end of the period 12,317 4,330
Supplemental disclosure of cash flow information:    
Interest 776 392
Income taxes
Noncash transactions -    
Change in accumulated other comprehensive loss, net change in unrealized gain (loss) on securities available for sale, net of income taxes 85 (106)
Transfer of securities from available for sale to held-to-maturity 7,945
Amortization of unrealized loss on securities transferred to held-to-maturity 39
Reclassification of stock compensation issued as compensation to directors from other liabilities to common stock 615
Common stock issued and reclassified from other liabilities $ 28
v3.19.2
General
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
General
(1) General. OptimumBank Holdings, Inc. (the “Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered commercial bank. The 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 community banking services to individual and corporate customers through its three banking offices located in Broward County, Florida.
   
  Basis of Presentation. 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 June 30, 2019, and the results of operations and cash flows for the three and six month periods ended June 30, 2019 and 2018. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six month periods ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year.
   
 

Junior Subordinated Debenture. The Company is in default with respect to its $5,155,000 Junior Subordinated Debenture (the “Debenture”) due to its failure to make certain required interest payments under the Debenture. The Debenture was issued to OptimumBank Holdings Capital Trust I, a Delaware statutory trust formed by the Company for the purpose of issuing and selling certain securities (the “Trust Preferred Securities”) representing undivided beneficial interests in the Debenture. The trust issued a total of 5,000 Trust Preferred Securities.

 

The Trustee, Wells Fargo Bank, for the Debenture (the “Trustee”) and the beneficial owners of the Debenture are entitled to accelerate the payment of the $5,155,000 principal balance plus accrued and unpaid interest totaling $1,864,000 at June 30, 2019. To date, neither the Trustee nor the holders have accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty.

 

In May 2018, a company affiliated with a director of the Company (the “New Holder”) purchased all 5,000 Trust Preferred Securities from a third party. During the third quarter of 2018, the New Holder sold its rights in 694 of the Trust Preferred Securities to several unaffiliated third parties, who subsequently exchanged these Trust Preferred Securities for 301,778 shares of the Company’s common stock. Under the Written Agreement with the Federal Reserve Bank of Atlanta the exchange of Trust Preferred Securities for the Company’s common stock cannot reduce the principal amount of the Debenture collateralizing the Trust Preferred Securities. Accordingly the transaction was recorded as an increase in the Company’s equity interest in the unconsolidated subsidiary trust, presented in “Other Assets” in the accompanying condensed consolidated balance sheets.

 

Although the Company and the New Holder have not executed a formal, definitive bilateral agreement, the New Holder has provided the Company with written representations that the New Holder will not accelerate and demand payment of any of the remaining 4,306 Trust Preferred Securities principal or accrued interest within twelve months from August 13, 2019, the date the Company’s Form 10-Q as of and for the period ended June 30, 2019, was filed with the Securities and Exchange Commission. See Note 10.

   
  Comprehensive Loss. GAAP 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 condensed consolidated balance sheets, such items along with net (loss) earnings, are components of comprehensive loss.

 

Accumulated other comprehensive loss consists of the following (in thousands):

 

    June 30,     December 31,  
    2019     2018  
             
Unrealized gain (loss) on securities available for sale   $ 10     $ (64 )
Unamortized portion of unrealized loss related to securities available for sale transferred to securities held-to-maturity     (338 )     (377 )
Income tax benefit     83       111  
                 
    $ (245 )   $ (330 )

 

  Income Taxes. The Company assessed its earnings history and trends and estimates of future earnings, and determined that the deferred tax asset could not be realized as of June 30, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
   
 

Reclassifications. Certains amounts have been reclassified to allow for consistent presentation in the periods presented.

 

Recent Pronouncements. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases on the condensed consolidated balance sheet. The Company adopted ASU 2016-02 on January 1, 2019. Our only lease at the adoption date was an operating lease for a branch location that has a 5 year term, commenced in December 2017, does not offer any options to extend, and does contain a rent escalation clause. The effect of this ASU increased total assets by $281,000 and total liabilities by $281,000, at the adoption date. With respect to the lease recognized on the condensed consolidated balance sheet as of June 30, 2019, the right of use asset of $246,000 and lease liability of $248,000 are included in the caption “other assets” and “other liabilities”, respectively, in the accompanying condensed consolidated balance sheet. The discount rate used in this calculation was 2.6%.

 

 

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses (Topic 326). The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU will take effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements. In July 2019, the FASB board voted to ask its staff to prepare an exposure draft proposing the new effective dates for ASU NO 2016-13. If approved, the new effective date for the Company would be January 1, 2023.
v3.19.2
Securities
 6 Months Ended
Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Securities
(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):

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At June 30, 2019:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $4,818   $181   $—   $4,999 
Mortgage-backed securities   1,814    61    —    1,875 
Total   6,632    242    —    6,874 
Available for Sale:                    
SBA Pool Securities  $2,112   $—   $(54)  $2,058 
Collateralized mortgage obligations   1,190           22    —    1,212 
Mortgage-backed securities   2,901    42    —    2,943 
Total  $6,203   $64   $(54)  $6,213 

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At December 31, 2018:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $5,183   $25   $(4)  $5,204 
Mortgage-backed securities   1,956    15    —    1,971 
Total  $7,139   $40   $(4)  $7,175 
Available for Sale -                    
SBA Pool Securities  $2,423   $-   $(64)  $2,359 

 

In April 2018, the bank transferred securities of $7,945,000 from the available-for-sale category to the held-to-maturity category at their then fair values resulting in unrealized losses of $432,000. The unrealized loss was recorded in stockholders’ equity net of amortization and net of tax and is being amortized over the remaining term of the securities. At June 30, 2019 and December 31, 2018, $94,000 and $55,000, respectively, has been amortized.

 

There were no sales of securities during the three and six month periods ended June 30, 2019 and 2018.

 

Securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows (in thousands):

 

    At June 30, 2019  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Available for Sale -                                               
SBA Pool Securities   $ 54     $ 2,058     $ —     $ —  

 

    At December 31, 2018  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Held-to-Maturity -                                
Collateralized mortgage obligations   $                  4     $ 1,361     $                  —     $ —  
Available for Sale -                                
SBA Pool Securities   $ 24     $ 829     $ 40     $ 1,530  

 

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. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospectus of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

 

At June 30, 2019 and December 31, 2018, the unrealized losses on six and seven investment securities, respectively, 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.
v3.19.2
Loans
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Loans
(3) Loans. The components of loans are as follows (in thousands):

 

   

At
June 30,

2019

    

At
December 31,

2018

  
             
Residential real estate   $ 26,588     $ 27,204  
Multi-family real estate     4,200       8,195  
Commercial real estate     46,985       36,634  
Land and construction     157       1,998  
Commercial     4,779       4,997  
Consumer     122       260  
                 
Total loans     82,831       79,288  
                 
Add (deduct):                
Net deferred loan fees, costs and premiums     83       155  
Allowance for loan losses     (2,053 )     (2,243 )
                 
Loans, net   $ 80,861     $ 77,200  

 

An analysis of the change in the allowance for loan losses follows (in thousands):

 

    Residential
Real Estate		     Multi-Family
Real Estate		     Commercial
Real Estate		     Land and
Construction		     Commercial     Consumer     Unallocated     Total  
Three Months Ended June 30, 2019:                                                                
                                                                 
Beginning balance   $ 532     $ 65     $ 628     $ —     $ 553     $ 19     $ 250     $ 2,047  
Provision (credit) for loan losses     5       (24 )     50       (5 )     5       (8 )     (23 )     —  
Charge-offs     —       —       —       —       —       —       —       —  
Recoveries     —       —       —       6       —       —       —       6  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Three Months Ended June 30, 2018:                                                                
Beginning balance   $ 647     $ 67     $ 712     $ 28     $ 279     $ 59     $ 2,201     $ 3,993  
Provision (credit) for loan losses     18       (14 )     27       (8 )     (13 )     (17 )     (2,093 )     (2,100 )
Charge-offs     —       —       —       —       —       (3 )     —       (3 )
Recoveries     —       —       —       6       —       3       —       9  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  
                                                 

Six Months Ended June 30, 2019:

                                                
                                                 
Beginning balance   $ 544     $ 88     $ 567     $ 19     $ 850     $ 25     $ 150     $ 2,243  
(Credit) provision for loan losses     (7 )     (47 )     306       (30 )     (292 )     (7 )     77       —  
Charge-offs     —       —       (195 )     —       —       (7 )     —       (202 )
Recoveries     —       —       —       12       —       —       —       12  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Six Months Ended June 30, 2018:                                                                
Beginning balance   $ 641     $ 59     $ 759     $ 22     $ 55     $ 86     $ 2,369     $ 3,991  
Provision (credit) for loan losses     24       (6 )     (20 )     (8 )     211       (40 )     (2,261 )     (2,100 )
Charge-offs     —       —       —       —       —       (12 )     —       (12 )
Recoveries     —       —       —       12       —       8       —       20  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  

 

 

    Residential Real Estate     Multi-
Family Real Estate		     Commercial Real Estate     Land and Construction     Commercial     Consumer     Unallocated     Total  
At June 30, 2019:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 2,445     $ —     $ 812     $ —     $ —     $ 4,211  
Balance in allowance for loan losses   $ 268     $ —     $ —     $ —     $ 523     $ —     $ —     $ 791  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 25,634     $ 4,200     $ 44,540     $ 157     $ 3,967     $ 122     $ —     $ 78,620  
Balance in allowance for loan losses   $ 269     $ 41     $ 678     $ 1     $ 35     $ 11     $ 227     $ 1,262  
                                                                 
At December 31, 2018:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 3,861     $ —     $ 1,928     $ —     $ —     $ 6,743  
Balance in allowance for loan losses   $ 268     $ —     $ 162     $ —     $ 814     $ —     $ —     $ 1,244  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 26,250     $ 8,195     $ 32,773     $ 1,998     $ 3,069     $ 260     $ —     $ 72,545  
Balance in allowance for loan losses   $ 276     $ 88     $ 405     $ 19     $ 36     $ 25     $ 150     $ 999  

 

(continued)

  

The Company has divided the loan portfolio into six portfolio segments, each with different risk characteristics and methodologies for assessing risk. All loans are underwritten based upon standards set forth in the policies approved by the Company’s Board of Directors (the “Board”). The Company identifies the portfolio segments as follows: 

 

Residential Real Estate, Multi-Family Real Estate, Commercial Real Estate, Land and Construction. Residential real estate loans are underwritten based on repayment capacity and source, value of the underlying property, credit history and stability. The Company offers first and second one-to-four family mortgage loans; the collateral for these loans is generally the clients' owner-occupied residences. Although these types of loans present lower levels of risk than commercial real estate loans, risks do still exist because of possible fluctuations in the value of the real estate collateral securing the loan, as well as changes in the borrowers' financial condition. Multi-family 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 Board. Such standards include, among other factors, loan to value limits, cash flow coverage and general creditworthiness of the obligors. Construction loans to borrowers 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, cost estimates and pre-construction sales information. The Company also makes loans on occasion for the purchase of land for future development by the borrower. Land loans are extended for 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.

   
  Commercial. Commercial business loans and lines of credit consist of loans to small- and medium-sized companies in the Company’s market area. Commercial loans are generally used for working capital purposes or for acquiring equipment, inventory or furniture. Primarily all of the Company’s commercial loans are secured loans, along with a small amount of unsecured loans. The Company’s underwriting analysis consists of a review of the financial statements of the borrower, the lending history of the borrower, the debt service capabilities of the borrower, the projected cash flows of the business, the value of the collateral, if any, and whether the loan is guaranteed by the principals of the borrower. These loans are generally secured by accounts receivable, inventory and equipment. Commercial loans are typically made on the basis of the borrower’s ability to make repayment from the cash flow of the borrower’s business, which makes them of higher risk than residential loans and the collateral securing loans may be difficult to appraise and may fluctuate in value based on the success of the business. The Company seeks to minimize these risks through its underwriting standards.
   
  Consumer. 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. Risk is mitigated by the fact that the loans are of smaller individual amounts.

 

The following summarizes the loan credit quality (in thousands):

 

    Pass     OLEM
(Other
Loans
Especially Mentioned)		     Sub-
standard		     Doubtful     Loss     Total  
At June 30, 2019:                                                
Residential real estate   $ 25,634     $ —     $ 954     $ —     $ —     $ 26,588  
Multi-family real estate     4,200       —       —       —       —       4,200  
Commercial real estate     42,814       1,726       2,445       —       —       46,985  
Land and construction     157       —       —       —       —       157  
Commercial     3,967       —       812       —       —       4,779  
Consumer     122       —       —       —       —       122  
                                                 
Total   $ 76,894     $ 1,726     $ 4,211     $ —     $ —     $ 82,831  
                                                 
At December 31, 2018:                                                
Residential real estate   $ 26,250     $ —     $ 954     $ —     $ —     $ 27,204  
Multi-family real estate     8,195       —       —       —       —       8,195  
Commercial real estate     31,050       1,723       3,861       —       —       36,634  
Land and construction     1,998       —       —       —       —       1,998  
Commercial     2,362       707       1,928       —       —       4,997  
Consumer     260       —       —       —       —       260  
                                                 
Total   $ 70,115     $ 2,430     $ 6,743     $ —     $ —     $ 79,288  

 

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 – 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 net 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. Included in this category are loans that are current on their payments, but the Bank is unable to document the source of repayment. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
   
  Doubtful – a loan classified as Doubtful has all the weaknesses inherent in one classified as 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. 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 effected in the future. The Company 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 effected in the future. The Company fully charges off any loan classified as Loss.

 

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 June 30, 2019:                                                        
Residential real estate   $ —     $ —     $ —     $ —     $ 26,588     $ —     $ 26,588  
Multi-family real estate     —       —       —       —       4,200       —       4,200  
Commercial real estate     —       —       —       —       46,985       —       46,985  
Land and construction     —       —       —       —       157       —       157  
Commercial     —       —       —       —       4,779       —       4,779  
Consumer     —       —       —       —       122       —       122  
                                                         
Total   $ —     $ —     $ —     $ —     $ 82,831     $ —     $ 82,831  

 

  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 December 31, 2018:                                                        
Residential real estate   $ —     $ —     $          —     $           —     $ 27,204     $             —     $ 27,204  
Multi-family real estate     —       —       —        —       8,195        —       8,195  
Commercial real estate     —       —       —        —       35,254       1,380       36,634  
Land and construction     —       —       —        —       1,998        —       1,998  
Commercial     —       —       —        —       4,997        —       4,997  
Consumer     —       —       —        —       260        —       260  
                                                         
Total   $        —     $         —     $ —     $  —     $ 77,908     $ 1,380      $ 79,288  

 

The following summarizes the amount of impaired loans (in thousands):

 

    At June 30, 2019     At December 31, 2018  
    Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		     Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		  
With no related allowance recorded:                                                
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 2,259     $ 2,259     $ —  
Commercial     —       —       —       1,114       1,114       —  
With related allowance recorded:                                                
Residential real estate     954       954       268       954       954       268  
Commercial real estate     —       —       —       1,602       1,602       162  
Commercial     812       812       523       814       814       814  
Total:                                                
Residential real estate   $ 954     $ 954     $ 268     $ 954     $ 954     $ 268  
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 3,861     $ 3,861     $ 162  
Commercial   $ 812     $ 812     $ 523     $ 1,928     $ 1,928     $ 814  
Total   $ 4,211     $ 4,211     $ 791     $ 6,743     $ 6,743     $ 1,244  

 

The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands):

 

    Three Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 954     $ 19     $ 19     $ 968     $ 19     $ 19  
Commercial real estate   $ 2,461     $ 31     $ 21     $ 226     $ 3     $ 3  
Commercial   $ 1,302     $ 20     $ 11     $ 2,287     $ 28     $ 28  
Total   $ 4,714     $ 70     $ 51     $ 3,481     $ 50     $ 50  

 

    Six Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 952     $ 37     $ 37     $ 1,000     $ 38     $ 38  
Commercial real estate   $ 3,059     $ 61     $ 59     $ 546     $ 15     $ 15  
Commercial   $ 1,548       43     $ 39     $ 1,319       45     $ 45  
Total   $ 5,559     $ 141     $ 135     $ 2,865     $ 98     $ 98  

 

  No loans have been determined to be troubled debt restructurings (TDR’s) during the three and six month periods ended June 30, 2019 or 2018. At June 30, 2019 and 2018, there were no loans modified and entered into TDR’s within the past twelve months, that subsequently defaulted during the three and six month periods ended June 30, 2019 or 2018.
v3.19.2
(Loss) Earnings Per Share
 6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
(Loss) Earnings Per Share
(4) (Loss) Earnings Per Share. Basic (loss) earnings per share has been computed on the basis of the weighted-average number of shares of common stock outstanding during the period. During the three and six month periods ended June 30, 2019, basic and diluted loss per share is the same due to the net loss incurred by the Company. During the three and six month periods ended June 30, 2018, basic and diluted earnings per share is the same as there were no outstanding potentially dilutive securities. (Loss) earnings per common share have been computed based on the following:

 

    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
    2019     2018     2019     2018  
Weighted-average number of common shares outstanding used to calculate basic and diluted loss per common share     1,881,759       1,409,904       1,869,933       1,292,381  
v3.19.2
Stock-Based Compensation
 6 Months Ended
Jun. 30, 2019
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation

(5) Stock-Based Compensation. The Company is authorized to grant stock options, stock grants and other forms of equity-based compensation under its 2011 Equity Incentive Plan as amended (the “2011 Plan”) and its 2018 Equity Incentive Plan (the “2018 Plan”). Both plans have been approved by shareholders. The Company is authorized to issue up to 210,000 shares of common stock under the 2011 Plan of which all have been issued, and up to 250,000 shares of common stock under the 2018 Plan, of which 157,190 have been issued, and 92,810 shares remain available for grant.
   
  The Company’s only grants under the 2011 Plan have been the issuance of shares of common stock to directors for director’s fees and compensation for services rendered. As of April 1, 2017, the Company discontinued the issuance of common stock as a method of payment of director’s fees.
   
  During 2018, the sale of 20,814 shares of common stock to a director of the Company, and the issuance of 79,186 shares of common stock in exchange for 7 shares of the Company’s preferred stock held by a director in April 2018, were treated as grants under the 2018 Plan. Please refer to the Company’s Forms 8-K filed with the Securities and Exchange Commission on November 16, 2018 and January 10, 2019 for further details.
   
  During the year ended December 31, 2017, the Company accrued compensation expense of $8,858 with respect to 2,821 shares to be issued to directors at a value of $3.14 per share on account of director’s fees accrued during the first quarter of 2017. These shares were issued in 2018.
   
  During the year ended December 31, 2018, the Company accrued compensation expense of $200,000 with respect to 36,101 shares issued to a director for services performed in 2018. The Company had previously accrued compensation expense of $200,000 in 2016 and 2017 for services performed. The Company had previously agreed to issue 105,820 shares to this director for services performed in 2016 and 2017. All shares were issued in 2018.
   
  During the three month period ended June 30, 2019, the Company recorded compensation expense of $200,000 with respect to 58,309 shares issued to a director for services performed.
v3.19.2
Fair Value Measurements
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements
(6) Fair Value Measurements. Impaired collateral-dependent loans are carried at fair value when the current collateral value is lower than the carrying value of the loan. Those impaired collateral-dependent loans which are measured at fair value on a nonrecurring basis are as follows (in thousands):

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the Six Month period ended

June 30, 2019

  
At June 30, 2019 —                                                
Residential real estate   $ 686     $ —     $ —     $ 686     $ 268     $ —  

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the year ended

December 31, 2018

  
At December 31, 2018:                                                
Residential real estate   $ 686     $  —     $ —     $ 686     $ 268     $       —  
Commercial real estate     1,312       —       —       1,312       71       —  
    $ 1,998     $ —     $ —     $ 1,998     $ 339     $ —  

 

Available-for-sale securities measured at fair value on a recurring basis are summarized below (in thousands):

 

    Fair Value Measurements Using  
   

Fair

Value

    

Quoted Prices

In Active Markets for Identical Assets

(Level 1)

    

Significant Other Observable Inputs

(Level 2)

    

Significant

Unobservable

Inputs

(Level 3)

  
                                 
At June 30, 2019:                              
SBA Pool Securities   $ 2,058     $ —     $ 2,058     $ —  
Collateralized mortgage obligations     1,212       —       1,212       —  
Mortgage-backed Securities     2,943       —       2,943       —  
    $ 6,213     $ —     $ 6,213     $ —  
                                 
At December 31, 2018:                                
SBA Pool Securities   $ 2,359     $ —     $ 2,359     $ —  

 

During the three and six month periods ended June 30, 2019 and 2018, no securities were transferred in or out of Levels 1, 2 or 3.
v3.19.2
Fair Value of Financial Instruments
 6 Months Ended
Jun. 30, 2019
Investments, All Other Investments [Abstract]  
Fair Value of Financial Instruments
(7) 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 June 30, 2019   At December 31, 2018
   

Carrying

Amount

    

Fair

Value

     Level  

Carrying

Amount

    

Fair

Value

     Level
Financial assets:                                        
Cash and cash equivalents   $ 12,317     $ 12,317     1   $ 7,983     $ 7,983     1
Securities available for sale     6,213       6,213     2     2,359       2,359     2
Securities held-to-maturity     6,632       6,874     2     7,139       7,175     2
Loans     80,861       80,544     3     77,200       77,062     3
Federal Home Loan Bank stock     642       642     3     1,132       1,132     3
Accrued interest receivable     370       370     3     314       314     3
                                         
Financial liabilities:                                        
Deposit liabilities     85,901       85,847     3     62,378       62,243     3
Federal Home Loan Bank advances     13,000       12,807     3     24,600       24,437     3
Junior subordinated debenture     5,155       N/A (1)   3     5,155       N/A (1)   3
Federal funds purchased     —       —     N/A     560       560     3
Off-balance sheet financial instruments     —       —     N/A     —       —     N/A

 

(1) The Company is unable to determine value based on significant unobservable inputs required in the calculation. Refer to Note 10 for further information.
v3.19.2
Off- Balance Sheet Financial Instruments
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Off- Balance Sheet Financial Instruments
(8) Off- Balance Sheet Financial Instruments. The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are commitments to extend credit, unused lines of credit, and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the condensed consolidated balance sheet. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

 

The Company’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

 

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because some of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary by the Company, upon extension of credit, is based on management’s credit evaluation of the counterparty.

 

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit to customers is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting those commitments. Standby letters of credit generally have expiration dates within one year.

 

Commitments to extend credit, unused lines of credit, and standby letters of credit typically result in loans with a market interest rate when funded. A summary of the contractual amounts of the Company’s financial instruments with off-balance-sheet risk at June 30, 2019 follows (in thousands):

 

Commitments to extend credit   $ 3,894  
         
Unused lines of credit   $ 2,962  
         
Standby letters of credit   $ —  
v3.19.2
Regulatory Matters
 6 Months Ended
Jun. 30, 2019
Banking and Thrift [Abstract]  
Regulatory Matters
(9) Regulatory Matters. The Bank is subject to various regulatory capital requirements administered by the bank regulatory agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of its assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.
   
  The Bank, is subject to the Basel III capital level threshold requirements under the Prompt Corrective Action regulations with full compliance phased in over a multi-year schedule. These new regulations were designed to ensure that banks maintain strong capital positions even in the event of severe economic downturns or unforeseen losses.
   
  The Bank is subject to the capital conservation buffer rules which place limitations on distributions, including dividend payments, and certain discretionary bonus payments to executive officers. In order to avoid these limitations, an institution must hold a capital conservation buffer above its minimum risk-based capital requirements. As of June 30, 2019, the Bank’s capital conservation buffer exceeds the minimum requirements of 2.50%.

 

The following table shows the Bank’s capital amounts and ratios and regulatory thresholds at June 30, 2019 and December 31, 2018 (dollars in thousands):

 

    Actual    

For Capital

Adequacy Purposes

    

Minimum

To Be Well

Capitalized Under

Prompt Corrective

Action Provisions

  
    Amount     %     Amount     %     Amount     %  
As of June 30, 2019:                                                
Total Capital to Risk-Weighted Assets   $ 12,193       14.61 %   $ 6,676       8.00 %   $ 8,344       10.00 %
Tier I Capital to Risk-Weighted Assets     11,138       13.35       5,007       6.00       6,626       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,138       13.35       3,755       4.50       5,424       6.50  
Tier I Capital to Total Assets     11,138       10.31       4,323       4.00       5,404       5.00  
                                                 
As of December 31, 2018:                                                
Total Capital to Risk-Weighted Assets   $ 12,155       15.86 %   $ 6,132       8.00 %   $ 7,665       10.00 %
Tier I Capital to Risk-Weighted Assets     11,181       14.59       4,599       6.00       6,132       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,181       14.59       3,449       4.50       4,983       6.50  
Tier I Capital to Total Assets     11,181       11.68       3,828       4.00       4,785       5.00  

 

 

Memorandum of Understanding. On August 28, 2018, the Bank agreed to the issuance of a Memorandum of Understanding (the “MOU”), with the FDIC and Florida Office of Financial Regulation which required the Bank to take certain measures to improve its safety and soundness. By agreeing to the MOU, the Bank was released from the Consent Order that became effective in 2016, including the restrictions on the interest rates paid on deposits.

 

Pursuant to the MOU, the Bank was required to take certain measures to maintain qualified management, improve its strategic planning and budgeting process, strengthen the interest rate management practices, limit its asset growth and provide for the ongoing organization, monitoring and operational administration of the Bank Secrecy Act Program. The MOU prohibited the payment of dividends by the Bank.

 

During the recent examinations, the examiners noted the Bank was in full compliance with the provisions of the MOU. In June 2019, the Bank was released from the MOU.

 

Company Written Agreement with Federal Reserve Bank of Atlanta (“FRB”). On June 22, 2010, the Company and the FRB entered into a Written Agreement with respect to certain aspects of the operation and management of the Company. The Written Agreement prohibits, without the prior approval of the FRB, the payment of cash dividends, taking dividends or payments from the Bank, making any interest, principal or other distributions on account of the Debenture, incurring, increasing or guaranteeing any debt, purchasing or redeeming any shares of stock, or appointing any new director or senior executive officer. Management believes that the Company is in substantial compliance with the requirements of the Written Agreement.
v3.19.2
Junior Subordinated Debenture
 6 Months Ended
Jun. 30, 2019
Debt Disclosure [Abstract]  
Junior Subordinated Debenture
(10) Junior Subordinated Debenture. On September 30, 2004, the Company issued a $5,155,000 Junior Subordinated Debenture (the “Debenture”) to Optimum Bank Holdings Capital Trust I, a Delaware statutory trust formed by the Company for the purpose of issuing and selling certain securities (the “Trust Preferred Securities”) representing undivided beneficial interests in the Debenture. The trust issued a total of 5,000 Trust Preferred Securities. The Debenture has a term of thirty years. The interest rate was fixed at 6.40% for the first five years, and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (4.77% at June 30, 2019). The Debenture is redeemable in certain circumstances. The terms of the Debenture 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 consecutive quarterly periods.
   
  Beginning in 2010, the Company exercised its right to defer payment of interest on the Debenture. Interest payments deferred as of June 30, 2019 totaled $1,864,000. The Company has deferred interest payments with respect to the Debenture for the maximum allowable twenty consecutive quarterly payments. The Company is in default under the Debenture due to its failure to make required interest payments. The Trustee for the Debenture and the beneficial owners of the Debenture can accelerate the $5,155,000 principal balance plus accrued and unpaid interest, as a result of this default. To date, neither the Trustee nor the holders have accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty. Under the Written Agreement, the Company is not able to make any interest or principal payments without the prior approval of the FRB.
   
  In May 2018, a company affiliated with a director of the Company (the “New Holder”) purchased all 5,000 Trust Preferred Securities from a third party. During the third quarter of 2018, the New Holder sold its rights in 694 of the Trust Preferred Securities to several unaffiliated third parties, who subsequently exchanged these Trust Preferred Securities for 301,778 shares of the Company’s common stock. Under the Written Agreement the exchange of Trust Preferred Securities for the Company’s common stock cannot reduce the principal amount of the Debenture collateralizing the Trust Preferred Securities. Accordingly, the transaction was recorded as an increase in the Company’s equity interest in the unconsolidated subsidiary trust, presented in “Other Assets” in the accompanying condensed consolidated balance sheets.
   
  Although the Company and the New Holder have not executed a formal, definitive bilateral agreement, the New Holder has provided the Company with written representations that the New Holder will not accelerate and demand payment of any of the remaining 4,306 Trust Preferred Securities principal or accrued interest within twelve months from August 13, 2019, the date the Company’s Form 10-Q as of and for the period ended June 30, 2019, was filed with the Securities and Exchange Commission.
v3.19.2
Branch Relocation
 6 Months Ended
Jun. 30, 2019
Branch Relocation  
Branch Relocation
(11) Branch Relocation. In June 2019, the Company entered into a sales contract to sell one of its branch locations for $1,400,000. The Company will finance $1,050,000 of the total sales price. Also in June 2019, the Company entered into a lease agreement for the purpose of relocating the aforementioned branch.
   
  The Company has requested regulatory approval for the branch relocation. The lease commencement date shall occur upon receiving approval from the regulators, but will start no later than 120 days from the date the lease agreement was executed in June 2019. The sale closing will occur within two weeks of Company vacating the building
v3.19.2
Lease
 6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Lease
(12) Lease. We adopted ASU 2016-02, Leases on January 1, 2019, which resulted in the recognition of one operating lease on the condensed consolidated balance sheet in 2019 and forward. See Note 1 – Recent Pronouncements for more information on the adoption of the ASU. We determine if a contract contains a lease at inception and recognize operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments at the adoption date. The right-of-use asset and lease liability is disclosed below and are included in the caption “Other assets” and “Other liabilities”, respectively, in the accompanying condensed consolidated balance sheet. As our lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at the adoption date in determining the present value of future payments. Lease agreements that have lease and non-lease components, are accounted for as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.
   
  The Company’s operating lease obligation is for one of the Company’s branch locations. Our lease has a remaining lease term of approximately 3.4 years and does not offer an option to extend the lease. The components of lease expense and other lease information are as follows (in thousands):

 

   Three Month Period Ended June 30, 2019   Six Month Period Ended June 30, 2019 
         
Operating Lease Cost  $19   $38 
Cash paid for amounts included in measurement of lease liabilities  $18   $36 

 

   At June 30, 2019 
      
Operating lease right-of-use asset  $246 
Operating lease liability  $248 
Weighted-average remaining lease term   3.4 years 
Weighted-average discount rate   2.6%

 

Future minimum lease payments under non-cancellable leases, reconciled to our discounted operating lease liability is as follows (in thousands):

 

   At June 30, 2019 
Remainder of 2019  $36 
2020  $75 
2021  $77 
2022  $72 
Total future minimum lease payments  $260 
Less imputed interest  $(12)
Total operating lease liability   248 
v3.19.2
General (Policies)
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
General
General. OptimumBank Holdings, Inc. (the “Company”) is a one-bank holding company and owns 100% of OptimumBank (the “Bank”), a Florida-chartered commercial bank. The 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 community banking services to individual and corporate customers through its three banking offices located in Broward County, Florida.
Basis of Presentation
Basis of Presentation. 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 June 30, 2019, and the results of operations and cash flows for the three and six month periods ended June 30, 2019 and 2018. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and six month periods ended June 30, 2019, are not necessarily indicative of the results to be expected for the full year.
Junior Subordinated Debenture

Junior Subordinated Debenture. The Company is in default with respect to its $5,155,000 Junior Subordinated Debenture (the “Debenture”) due to its failure to make certain required interest payments under the Debenture. The Debenture was issued to OptimumBank Holdings Capital Trust I, a Delaware statutory trust formed by the Company for the purpose of issuing and selling certain securities (the “Trust Preferred Securities”) representing undivided beneficial interests in the Debenture. The trust issued a total of 5,000 Trust Preferred Securities.

 

The Trustee, Wells Fargo Bank, for the Debenture (the “Trustee”) and the beneficial owners of the Debenture are entitled to accelerate the payment of the $5,155,000 principal balance plus accrued and unpaid interest totaling $1,864,000 at June 30, 2019. To date, neither the Trustee nor the holders have accelerated the outstanding balance of the Debenture. No adjustments to the accompanying condensed consolidated financial statements have been made as a result of this uncertainty.

 

In May 2018, a company affiliated with a director of the Company (the “New Holder”) purchased all 5,000 Trust Preferred Securities from a third party. During the third quarter of 2018, the New Holder sold its rights in 694 of the Trust Preferred Securities to several unaffiliated third parties, who subsequently exchanged these Trust Preferred Securities for 301,778 shares of the Company’s common stock. Under the Written Agreement with the Federal Reserve Bank of Atlanta the exchange of Trust Preferred Securities for the Company’s common stock cannot reduce the principal amount of the Debenture collateralizing the Trust Preferred Securities. Accordingly the transaction was recorded as an increase in the Company’s equity interest in the unconsolidated subsidiary trust, presented in “Other Assets” in the accompanying condensed consolidated balance sheets.

 

Although the Company and the New Holder have not executed a formal, definitive bilateral agreement, the New Holder has provided the Company with written representations that the New Holder will not accelerate and demand payment of any of the remaining 4,306 Trust Preferred Securities principal or accrued interest within twelve months from August 13, 2019, the date the Company’s Form 10-Q as of and for the period ended June 30, 2019, was filed with the Securities and Exchange Commission. See Note 10.
Comprehensive Loss
Comprehensive Loss. GAAP 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 condensed consolidated balance sheets, such items along with net (loss) earnings, are components of comprehensive loss.

 

Accumulated other comprehensive loss consists of the following (in thousands):

 

    June 30,     December 31,  
    2019     2018  
             
Unrealized gain (loss) on securities available for sale   $ 10     $ (64 )
Unamortized portion of unrealized loss related to securities available for sale transferred to securities held-to-maturity     (338 )     (377 )
Income tax benefit     83       111  
                 
    $ (245 )   $ (330 )
Income Taxes

  Income Taxes. The Company assessed its earnings history and trends and estimates of future earnings, and determined that the deferred tax asset could not be realized as of June 30, 2019. Accordingly, a valuation allowance was recorded against the net deferred tax asset.
Reclassifications

Reclassifications. Certains amounts have been reclassified to allow for consistent presentation in the periods presented.
Recent Pronouncements

Recent Pronouncements. In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No. 2016-02, Leases (Topic 842). ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases on the condensed consolidated balance sheet. The Company adopted ASU 2016-02 on January 1, 2019. Our only lease at the adoption date was an operating lease for a branch location that has a 5 year term, commenced in December 2017, does not offer any options to extend, and does contain a rent escalation clause. The effect of this ASU increased total assets by $281,000 and total liabilities by $281,000, at the adoption date. With respect to the lease recognized on the condensed consolidated balance sheet as of June 30, 2019, the right of use asset of $246,000 and lease liability of $248,000 are included in the caption “other assets” and “other liabilities”, respectively, in the accompanying condensed consolidated balance sheet. The discount rate used in this calculation was 2.6%.

 

 

In June 2016, the FASB issued ASU No. 2016-13 Financial Instruments-Credit Losses (Topic 326). The ASU improves financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by the Company. The ASU requires the Company to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. The Company will continue to use judgment to determine which loss estimation method is appropriate for their circumstances. The ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. Additionally, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. The ASU will take effect for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is in the process of determining the effect of the ASU on its condensed consolidated financial statements. In July 2019, the FASB board voted to ask its staff to prepare an exposure draft proposing the new effective dates for ASU NO 2016-13. If approved, the new effective date for the Company would be January 1, 2023.
v3.19.2
General (Tables)
 6 Months Ended
Jun. 30, 2019
Accounting Policies [Abstract]  
Schedule of Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following (in thousands):

 

    June 30,     December 31,  
    2019     2018  
             
Unrealized gain (loss) on securities available for sale   $ 10     $ (64 )
Unamortized portion of unrealized loss related to securities available for sale transferred to securities held-to-maturity     (338 )     (377 )
Income tax benefit     83       111  
                 
    $ (245 )   $ (330 )
v3.19.2
Securities (Tables)
 6 Months Ended
Jun. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
Schedule of Amortized Cost and Approximate Fair Values of Securities
The carrying amount of securities and approximate fair values are as follows (in thousands):

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At June 30, 2019:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $4,818   $181   $—   $4,999 
Mortgage-backed securities   1,814    61    —    1,875 
Total   6,632    242    —    6,874 
Available for Sale:                    
SBA Pool Securities  $2,112   $—   $(54)  $2,058 
Collateralized mortgage obligations   1,190           22    —    1,212 
Mortgage-backed securities   2,901    42    —    2,943 
Total  $6,203   $64   $(54)  $6,213 

 

   Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Fair
Value		 
                 
At December 31, 2018:                    
Held-to-Maturity:                    
Collateralized mortgage obligations  $5,183   $25   $(4)  $5,204 
Mortgage-backed securities   1,956    15    —    1,971 
Total  $7,139   $40   $(4)  $7,175 
Available for Sale -                    
SBA Pool Securities  $2,423   $-   $(64)  $2,359 
Schedule of Securities with Gross Unrealized Losses, by Investment Category

Securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows (in thousands):

 

    At June 30, 2019  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Available for Sale -                                
SBA Pool Securities   $ 54     $ 2,058     $ —     $ —  

 

    At December 31, 2018  
    Over Twelve Months    

Less Than Twelve

Months

  
    Gross
Unrealized
Losses		     Fair
Value		     Gross
Unrealized
Losses		     Fair
Value		  
                         
Held-to-Maturity -                                
Collateralized mortgage obligations   $                  4     $ 1,361     $                  —     $ —  
Available for Sale -                                
SBA Pool Securities   $ 24     $ 829     $ 40     $ 1,530  
v3.19.2
Loans (Tables)
 6 Months Ended
Jun. 30, 2019
Receivables [Abstract]  
Schedule of Components of Loans

  The components of loans are as follows (in thousands):

 

   

At
June 30,

2019

    

At
December 31,

2018

  
             
Residential real estate   $ 26,588     $ 27,204  
Multi-family real estate     4,200       8,195  
Commercial real estate     46,985       36,634  
Land and construction     157       1,998  
Commercial     4,779       4,997  
Consumer     122       260  
                 
Total loans     82,831       79,288  
                 
Add (deduct):                
Net deferred loan fees, costs and premiums     83       155  
Allowance for loan losses     (2,053 )     (2,243 )
                 
Loans, net   $ 80,861     $ 77,200  
Schedule of Change in Allowance for Loan Losses
An analysis of the change in the allowance for loan losses follows (in thousands):

 

    Residential
Real Estate		     Multi-Family
Real Estate		     Commercial
Real Estate		     Land and
Construction		     Commercial     Consumer     Unallocated     Total  
Three Months Ended June 30, 2019:                                                                
                                                                 
Beginning balance   $ 532     $ 65     $ 628     $ —     $ 553     $ 19     $ 250     $ 2,047  
Provision (credit) for loan losses     5       (24 )     50       (5 )     5       (8 )     (23 )     —  
Charge-offs     —       —       —       —       —       —       —       —  
Recoveries     —       —       —       6       —       —       —       6  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Three Months Ended June 30, 2018:                                                                
Beginning balance   $ 647     $ 67     $ 712     $ 28     $ 279     $ 59     $ 2,201     $ 3,993  
Provision (credit) for loan losses     18       (14 )     27       (8 )     (13 )     (17 )     (2,093 )     (2,100 )
Charge-offs     —       —       —       —       —       (3 )     —       (3 )
Recoveries     —       —       —       6       —       3       —       9  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  
                                                 

Six Months Ended June 30, 2019:

                                                
                                                 
Beginning balance   $ 544     $ 88     $ 567     $ 19     $ 850     $ 25     $ 150     $ 2,243  
(Credit) provision for loan losses     (7 )     (47 )     306       (30 )     (292 )     (7 )     77       —  
Charge-offs     —       —       (195 )     —       —       (7 )     —       (202 )
Recoveries     —       —       —       12       —       —       —       12  
                                                                 
Ending balance   $ 537     $ 41     $ 678     $ 1     $ 558     $ 11     $ 227     $ 2,053  
                                                                 
Six Months Ended June 30, 2018:                                                                
Beginning balance   $ 641     $ 59     $ 759     $ 22     $ 55     $ 86     $ 2,369     $ 3,991  
Provision (credit) for loan losses     24       (6 )     (20 )     (8 )     211       (40 )     (2,261 )     (2,100 )
Charge-offs     —       —       —       —       —       (12 )     —       (12 )
Recoveries     —       —       —       12       —       8       —       20  
                                                                 
Ending balance   $ 665     $ 53     $ 739     $ 26     $ 266     $ 42     $ 108     $ 1,899  

 

 

    Residential Real Estate     Multi-
Family Real Estate		     Commercial Real Estate     Land and Construction     Commercial     Consumer     Unallocated     Total  
At June 30, 2019:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 2,445     $ —     $ 812     $ —     $ —     $ 4,211  
Balance in allowance for loan losses   $ 268     $ —     $ —     $ —     $ 523     $ —     $ —     $ 791  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 25,634     $ 4,200     $ 44,540     $ 157     $ 3,967     $ 122     $ —     $ 78,620  
Balance in allowance for loan losses   $ 269     $ 41     $ 678     $ 1     $ 35     $ 11     $ 227     $ 1,262  
                                                                 
At December 31, 2018:                                                                
Individually evaluated for impairment:                                                                
Recorded investment   $ 954     $ —     $ 3,861     $ —     $ 1,928     $ —     $ —     $ 6,743  
Balance in allowance for loan losses   $ 268     $ —     $ 162     $ —     $ 814     $ —     $ —     $ 1,244  
                                                                 
Collectively evaluated for impairment:                                                                
Recorded investment   $ 26,250     $ 8,195     $ 32,773     $ 1,998     $ 3,069     $ 260     $ —     $ 72,545  
Balance in allowance for loan losses   $ 276     $ 88     $ 405     $ 19     $ 36     $ 25     $ 150     $ 999  
Schedule of Loans by Credit Quality

  The following summarizes the loan credit quality (in thousands):

 

    Pass     OLEM
(Other
Loans
Especially Mentioned)		     Sub-
standard		     Doubtful     Loss     Total  
At June 30, 2019:                                                
Residential real estate   $ 25,634     $ —     $ 954     $ —     $ —     $ 26,588  
Multi-family real estate     4,200       —       —       —       —       4,200  
Commercial real estate     42,814       1,726       2,445       —       —       46,985  
Land and construction     157       —       —       —       —       157  
Commercial     3,967       —       812       —       —       4,779  
Consumer     122       —       —       —       —       122  
                                                 
Total   $ 76,894     $ 1,726     $ 4,211     $ —     $ —     $ 82,831  
                                                 
At December 31, 2018:                                                
Residential real estate   $ 26,250     $ —     $ 954     $ —     $ —     $ 27,204  
Multi-family real estate     8,195       —       —       —       —       8,195  
Commercial real estate     31,050       1,723       3,861       —       —       36,634  
Land and construction     1,998       —       —       —       —       1,998  
Commercial     2,362       707       1,928       —       —       4,997  
Consumer     260       —       —       —       —       260  
                                                 
Total   $ 70,115     $ 2,430     $ 6,743     $ —     $ —     $ 79,288  
Schedule of Age Analysis of Past-due Loans
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 June 30, 2019:                                                        
Residential real estate   $ —     $ —     $ —     $ —     $ 26,588     $ —     $ 26,588  
Multi-family real estate     —       —       —       —       4,200       —       4,200  
Commercial real estate     —       —       —       —       46,985       —       46,985  
Land and construction     —       —       —       —       157       —       157  
Commercial     —       —       —       —       4,779       —       4,779  
Consumer     —       —       —       —       122       —       122  
                                                         
Total   $ —     $ —     $ —     $ —     $ 82,831     $ —     $ 82,831  

 

  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 December 31, 2018:                                                        
Residential real estate   $ —     $ —     $          —     $           —     $ 27,204     $             —     $ 27,204  
Multi-family real estate     —       —       —        —       8,195        —       8,195  
Commercial real estate     —       —       —        —       35,254       1,380       36,634  
Land and construction     —       —       —        —       1,998        —       1,998  
Commercial     —       —       —        —       4,997        —       4,997  
Consumer     —       —       —        —       260        —       260  
                                                         
Total   $        —     $         —     $ —     $  —     $ 77,908     $ 1,380      $ 79,288  
Schedule of Impaired Loans

The following summarizes the amount of impaired loans (in thousands):

 

    At June 30, 2019     At December 31, 2018  
    Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		     Recorded
Investment		     Unpaid
Principal
Balance		     Related
Allowance		  
With no related allowance recorded:                                                
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 2,259     $ 2,259     $ —  
Commercial     —       —       —       1,114       1,114       —  
With related allowance recorded:                                                
Residential real estate     954       954       268       954       954       268  
Commercial real estate     —       —       —       1,602       1,602       162  
Commercial     812       812       523       814       814       814  
Total:                                                
Residential real estate   $ 954     $ 954     $ 268     $ 954     $ 954     $ 268  
Commercial real estate   $ 2,445     $ 2,445     $ —     $ 3,861     $ 3,861     $ 162  
Commercial   $ 812     $ 812     $ 523     $ 1,928     $ 1,928     $ 814  
Total   $ 4,211     $ 4,211     $ 791     $ 6,743     $ 6,743     $ 1,244  
Schedule of Interest Income Recognized and Received on Impaired Loans
The average net investment in impaired loans and interest income recognized and received on impaired loans are as follows (in thousands):

 

    Three Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 954     $ 19     $ 19     $ 968     $ 19     $ 19  
Commercial real estate   $ 2,461     $ 31     $ 21     $ 226     $ 3     $ 3  
Commercial   $ 1,302     $ 20     $ 11     $ 2,287     $ 28     $ 28  
Total   $ 4,714     $ 70     $ 51     $ 3,481     $ 50     $ 50  

 

    Six Months Ended June 30,  
    2019     2018  
    Average     Interest     Interest     Average     Interest     Interest  
    Recorded     Income     Income     Recorded     Income     Income  
    Investment     Recognized     Received     Investment     Recognized     Received  
                                     
Residential real estate   $ 952     $ 37     $ 37     $ 1,000     $ 38     $ 38  
Commercial real estate   $ 3,059     $ 61     $ 59     $ 546     $ 15     $ 15  
Commercial   $ 1,548       43     $ 39     $ 1,319       45     $ 45  
Total   $ 5,559     $ 141     $ 135     $ 2,865     $ 98     $ 98  
v3.19.2
(Loss) Earnings Per Share (Tables)
 6 Months Ended
Jun. 30, 2019
Earnings Per Share [Abstract]  
Schedule of Weighted Average Number of Common Shares Outstanding

  (Loss) earnings per common share have been computed based on the following:

 

    Three Months Ended
June 30,		     Six Months Ended
June 30,		  
    2019     2018     2019     2018  
Weighted-average number of common shares outstanding used to calculate basic and diluted loss per common share     1,881,759       1,409,904       1,869,933       1,292,381  
v3.19.2
Fair Value Measurements (Tables)
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Assets Measured On Nonrecurring Basis
Those impaired collateral-dependent loans which are measured at fair value on a nonrecurring basis are as follows (in thousands):

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the Six Month period ended

June 30, 2019

  
At June 30, 2019 —                                                
Residential real estate   $ 686     $ —     $ —     $ 686     $ 268     $ —  

 

   

Fair

Value

     Level 1     Level 2     Level 3    

Total

Losses

    

Losses

Recorded in

Operations For the year ended

December 31, 2018

  
At December 31, 2018:                                                
Residential real estate   $ 686     $  —     $ —     $ 686     $ 268     $       —  
Commercial real estate     1,312       —       —       1,312       71       —  
    $ 1,998     $ —     $ —     $ 1,998     $ 339     $ —  
Schedule of Available-for-sale Securities Measured at Fair Value On Recurring Basis

Available-for-sale securities measured at fair value on a recurring basis are summarized below (in thousands):

 

    Fair Value Measurements Using  
   

Fair

Value

    

Quoted Prices

In Active Markets for Identical Assets

(Level 1)

    

Significant Other Observable Inputs

(Level 2)

    

Significant

Unobservable

Inputs

(Level 3)

  
                                 
At June 30, 2019:                              
SBA Pool Securities   $ 2,058     $ —     $ 2,058     $ —  
Collateralized mortgage obligations     1,212       —       1,212       —  
Mortgage-backed Securities     2,943       —       2,943       —  
    $ 6,213     $ —     $ 6,213     $ —  
                                 
At December 31, 2018:                                
SBA Pool Securities   $ 2,359     $ —     $ 2,359     $ —  
v3.19.2
Fair Value of Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2019
Investments, All Other Investments [Abstract]  
Schedule of Estimated 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 June 30, 2019   At December 31, 2018
   

Carrying

Amount

    

Fair

Value

     Level  

Carrying

Amount

    

Fair

Value

     Level
Financial assets:                                        
Cash and cash equivalents   $ 12,317     $ 12,317     1   $ 7,983     $ 7,983     1
Securities available for sale     6,213       6,213     2     2,359       2,359     2
Securities held-to-maturity     6,632       6,874     2     7,139       7,175     2
Loans     80,861       80,544     3     77,200       77,062     3
Federal Home Loan Bank stock     642       642     3     1,132       1,132     3
Accrued interest receivable     370       370     3     314       314     3
                                         
Financial liabilities:                                        
Deposit liabilities     85,901       85,847     3     62,378       62,243     3
Federal Home Loan Bank advances     13,000       12,807     3     24,600       24,437     3
Junior subordinated debenture     5,155       N/A (1)   3     5,155       N/A (1)   3
Federal funds purchased     —       —     N/A     560       560     3
Off-balance sheet financial instruments     —       —     N/A     —       —     N/A

 

(1) The Company is unable to determine value based on significant unobservable inputs required in the calculation. Refer to Note 10 for further information.
v3.19.2
Off- Balance Sheet Financial Instruments (Tables)
 6 Months Ended
Jun. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Off-Balance Sheet Risks of Financial Instruments

A summary of the contractual amounts of the Company’s financial instruments with off-balance-sheet risk at June 30, 2019 follows (in thousands):

 

Commitments to extend credit   $ 3,894  
         
Unused lines of credit   $ 2,962  
         
Standby letters of credit   $ —  
v3.19.2
Regulatory Matters (Tables)
 6 Months Ended
Jun. 30, 2019
Banking and Thrift [Abstract]  
Schedule of Capital Amounts, Ratios and Regulatory Thresholds

  The following table shows the Bank’s capital amounts and ratios and regulatory thresholds at June 30, 2019 and December 31, 2018 (dollars in thousands):

 

    Actual    

For Capital

Adequacy Purposes

    

Minimum

To Be Well

Capitalized Under

Prompt Corrective

Action Provisions

  
    Amount     %     Amount     %     Amount     %  
As of June 30, 2019:                                                
Total Capital to Risk-Weighted Assets   $ 12,193       14.61 %   $ 6,676       8.00 %   $ 8,344       10.00 %
Tier I Capital to Risk-Weighted Assets     11,138       13.35       5,007       6.00       6,626       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,138       13.35       3,755       4.50       5,424       6.50  
Tier I Capital to Total Assets     11,138       10.31       4,323       4.00       5,404       5.00  
                                                 
As of December 31, 2018:                                                
Total Capital to Risk-Weighted Assets   $ 12,155       15.86 %   $ 6,132       8.00 %   $ 7,665       10.00 %
Tier I Capital to Risk-Weighted Assets     11,181       14.59       4,599       6.00       6,132       8.00  
Common equity Tier I capital to Risk-Weighted Assets     11,181       14.59       3,449       4.50       4,983       6.50  
Tier I Capital to Total Assets     11,181       11.68       3,828       4.00       4,785       5.00  
v3.19.2
Lease (Tables)
 6 Months Ended
Jun. 30, 2019
Leases [Abstract]  
Schedule of Components of Lease Cost
   Three Month Period Ended June 30, 2019   Six Month Period Ended June 30, 2019 
         
Operating Lease Cost  $19   $38 
Cash paid for amounts included in measurement of lease liabilities  $18   $36 
Schedule of Operating Lease Liability

    At June 30, 2019  
       
Operating lease right-of-use asset   $ 246  
Operating lease liability   $ 248  
Weighted-average remaining lease term     3.4 years  
Weighted-average discount rate     2.6 %
Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases

Future minimum lease payments under non-cancellable leases, reconciled to our discounted operating lease liability is as follows (in thousands):

 

    At June 30, 2019  
Remainder of 2019   $ 36  
2020   $ 75  
2021   $ 77  
2022   $ 72  
Total future minimum lease payments   $ 260  
Less imputed interest   $ (12 )
Total operating lease liability     248  
v3.19.2
General (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended
May 31, 2018
Feb. 29, 2016
Sep. 30, 2018
Jun. 30, 2019
Ownership percentage       100.00%
Junior subordinated debenture       $ 5,155
Number of trust preferred securities issued       5,000
Debt instrument periodic payment, principal       $ 5,155
Accrued and unpaid interest payable       $ 1,864
Operating lease, term of contract       5 years
Right of use asset       $ 246
Lease liability       $ 248
Percentage of discount rate       2.60%
Accounting Standards Update 2016-02 [Member]        
Increase in assets due to effect on ASU   $ 281    
Increase in liabilities due to effect on ASU   $ 281    
Optimum Bank Holdings Capital Trust I [Member]        
Number of trust preferred securities issued       5,000
Remaining trust preferred securities       4,306
New Holder [Member]        
Trust preferred securities repurchased 5,000      
New Holder [Member] | Several Unaffiliated Third Parties [Member]        
Number of trust preferred securities issued     694  
Conversion of stock, shares converted     301,778  
v3.19.2
General - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Accounting Policies [Abstract]          
Unrealized gain (loss) on securities available for sale     $ 10   $ (64)
Unamortized portion of unrealized loss related to securities available for sale transferred to securities held-to-maturity     (338)   (377)
Income tax benefit (52) 111
Accumulated other comprehensive loss     $ (245)   $ (330)
v3.19.2
Securities (Details Narrative)
$ in Thousands
 1 Months Ended 6 Months Ended 12 Months Ended
Apr. 30, 2018
USD ($)
Jun. 30, 2019
USD ($)
Number
Dec. 31, 2018
USD ($)
Number
Jun. 30, 2018
USD ($)
Investments, Debt and Equity Securities [Abstract]        
Held to maturity securities $ 7,945 $ 6,632 $ 7,139  
Fair values resulting in unrealized losses $ 432      
Amortization expenses   94 $ 55  
Available for sale securities    
Investment securities in unrealized loss position | Number   6 7  
v3.19.2
Securities - Schedule of Amortized Cost and Approximate Fair Values of Securities (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Held-to-maturity, amortized cost $ 6,632 $ 7,139
Held-to-maturity, gross unrealized gains 242 40
Held-to-maturity, gross unrealized losses (4)
Held-to-maturity, fair value 6,687 7,175
Available for sale, amortized cost 6,203  
Available for sale, gross unrealized gains 64  
Available for sale, gross unrealized losses (54)  
Available for sale, fair value 6,213 2,359
Collateralized Mortgage Obligations [Member]    
Held-to-maturity, amortized cost 4,818 5,183
Held-to-maturity, gross unrealized gains 181 25
Held-to-maturity, gross unrealized losses (4)
Held-to-maturity, fair value 4,999 5,204
Available for sale, amortized cost 1,190  
Available for sale, gross unrealized gains 22  
Available for sale, gross unrealized losses  
Available for sale, fair value 1,212  
Mortgage Backed Securities [Member]    
Held-to-maturity, amortized cost 1,814 1,956
Held-to-maturity, gross unrealized gains 61 15
Held-to-maturity, gross unrealized losses
Held-to-maturity, fair value 1,875 1,971
Available for sale, amortized cost 2,901  
Available for sale, gross unrealized gains 42  
Available for sale, gross unrealized losses  
Available for sale, fair value 2,943  
SBA Pool Securities [Member]    
Available for sale, amortized cost 2,112 2,423
Available for sale, gross unrealized gains
Available for sale, gross unrealized losses (54) (64)
Available for sale, fair value $ 2,058 $ 2,359
v3.19.2
Securities - Schedule of Securities with Gross Unrealized Losses, by Investment Category (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
SBA Pool Securities [Member]    
Available for Sale, Securities Position Over 12 Months, Gross unrealized Losses $ 54 $ 24
Available for Sale, Securities Position Over 12 Months, Fair Value 2,058 829
Available for Sale, Securities Position Less than 12 Month, Gross unrealized Losses 40
Available for Sale, Securities Position Less than 12 Month, Fair Value 1,530
Collateralized Mortgage Obligations [Member]    
Held to Maturity, Securities Position Over 12 Months, Gross Unrealized Losses   4
Held to Maturity, Securities Position Over 12 Months, Fair Value   1,361
Held to Maturity, Securities Position Less Than 12 Months, Gross Unrealized Losses  
Held to Maturity, Securities Position Less Than 12 Months, Fair Value  
v3.19.2
Loans - Schedule of Components of Loans (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Jun. 30, 2018
Mar. 31, 2018
Dec. 31, 2017
Total loans $ 82,831   $ 79,288      
Net deferred loan fees, costs and premiums 83   155      
Allowance for loan losses (2,053) $ (2,047) (2,243) $ (1,899) $ (3,993) $ (3,991)
Loans, net 80,861   77,200      
Residential Real Estate [Member]            
Total loans 26,588   27,204      
Allowance for loan losses (537) (532) (544) (665) (647) (641)
Multi-Family Real Estate [Member]            
Total loans 4,200   8,195      
Allowance for loan losses (41) (65) (88) (53) (67) (59)
Commercial Real Estate [Member]            
Total loans 46,985   36,634      
Allowance for loan losses (678) (628) (567) (739) (712) (759)
Land and Construction [Member]            
Total loans 157   1,998      
Allowance for loan losses (1) (19) (26) (28) (22)
Commercial [Member]            
Total loans 4,779   4,997      
Allowance for loan losses (558) (553) (850) (266) (279) (55)
Consumer [Member]            
Total loans 122   260      
Allowance for loan losses $ (11) $ (19) $ (25) $ (42) $ (59) $ (86)
v3.19.2
Loans - Schedule of Change in Allowance for Loan Losses (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Beginning balance $ 2,047 $ 3,993 $ 2,243 $ 3,991  
Provision (credit) for loan losses (2,100) (2,100)  
Charge-offs (3) (202) (12)  
Recoveries 6 9 12 20  
Ending balance 2,053 1,899 2,053 1,899  
Individually evaluated for impairment, Recorded investment 4,211   4,211   $ 6,743
Individually evaluated for impairment, Allowance for loan losses 791   791   1,244
Collectively evaluated for impairment, Recorded investment 78,620   78,620   72,545
Collectively evaluated for impairment, Allowance for loan losses 1,262   1,262   999
Residential Real Estate [Member]          
Beginning balance 532 647 544 641  
Provision (credit) for loan losses 5 18 (7) 24  
Charge-offs  
Recoveries  
Ending balance 537 665 537 665  
Individually evaluated for impairment, Recorded investment 954   954   954
Individually evaluated for impairment, Allowance for loan losses 268   268   268
Collectively evaluated for impairment, Recorded investment 25,634   25,634   26,250
Collectively evaluated for impairment, Allowance for loan losses 269   269   276
Multi-Family Real Estate [Member]          
Beginning balance 65 67 88 59  
Provision (credit) for loan losses (24) (14) (47) (6)  
Charge-offs  
Recoveries  
Ending balance 41 53 41 53  
Individually evaluated for impairment, Recorded investment    
Individually evaluated for impairment, Allowance for loan losses    
Collectively evaluated for impairment, Recorded investment 4,200   4,200   8,195
Collectively evaluated for impairment, Allowance for loan losses 41   41   88
Commercial Real Estate [Member]          
Beginning balance 628 712 567 759  
Provision (credit) for loan losses 50 27 306 (20)  
Charge-offs (195)  
Recoveries  
Ending balance 678 739 678 739  
Individually evaluated for impairment, Recorded investment 2,445   2,445   3,861
Individually evaluated for impairment, Allowance for loan losses     162
Collectively evaluated for impairment, Recorded investment 44,540   44,540   32,773
Collectively evaluated for impairment, Allowance for loan losses 678   678   405
Land and Construction [Member]          
Beginning balance 28 19 22  
Provision (credit) for loan losses (5) (8) (30) (8)  
Charge-offs  
Recoveries 6 6 12 12  
Ending balance 1 26 1 26  
Individually evaluated for impairment, Recorded investment    
Individually evaluated for impairment, Allowance for loan losses    
Collectively evaluated for impairment, Recorded investment 157   157   1,998
Collectively evaluated for impairment, Allowance for loan losses 1   1   19
Commercial [Member]          
Beginning balance 553 279 850 55  
Provision (credit) for loan losses 5 (13) (292) 211  
Charge-offs  
Recoveries  
Ending balance 558 266 558 266  
Individually evaluated for impairment, Recorded investment 812   812   1,928
Individually evaluated for impairment, Allowance for loan losses 523   523   814
Collectively evaluated for impairment, Recorded investment 3,967   3,967   3,069
Collectively evaluated for impairment, Allowance for loan losses 35   35   36
Consumer [Member]          
Beginning balance 19 59 25 86  
Provision (credit) for loan losses (8) (17) (7) (40)  
Charge-offs (3) (7) (12)  
Recoveries 3 8  
Ending balance 11 42 11 42  
Individually evaluated for impairment, Recorded investment    
Individually evaluated for impairment, Allowance for loan losses    
Collectively evaluated for impairment, Recorded investment 122   122   260
Collectively evaluated for impairment, Allowance for loan losses 11   11   25
Unallocated [Member]          
Beginning balance 250 2,201 150 2,369  
Provision (credit) for loan losses (23) (2,093) 77 (2,261)  
Charge-offs  
Recoveries  
Ending balance 227 $ 108 227 $ 108  
Individually evaluated for impairment, Recorded investment    
Individually evaluated for impairment, Allowance for loan losses    
Collectively evaluated for impairment, Recorded investment    
Collectively evaluated for impairment, Allowance for loan losses $ 227   $ 227   $ 150
v3.19.2
Loans - Schedule of Loans by Credit Quality (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Risk rated loans $ 82,831 $ 79,288
Pass [Member]    
Risk rated loans 76,894 70,115
OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans 1,726 2,430
Sub-standard [Member]    
Risk rated loans 4,211 6,743
Doubtful [Member]    
Risk rated loans
Loss [Member]    
Risk rated loans
Residential Real Estate [Member]    
Risk rated loans 26,588 27,204
Residential Real Estate [Member] | Pass [Member]    
Risk rated loans 25,634 26,250
Residential Real Estate [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans
Residential Real Estate [Member] | Sub-standard [Member]    
Risk rated loans 954 954
Residential Real Estate [Member] | Doubtful [Member]    
Risk rated loans
Residential Real Estate [Member] | Loss [Member]    
Risk rated loans
Multi-Family Real Estate [Member]    
Risk rated loans 4,200 8,195
Multi-Family Real Estate [Member] | Pass [Member]    
Risk rated loans 4,200 8,195
Multi-Family Real Estate [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans
Multi-Family Real Estate [Member] | Sub-standard [Member]    
Risk rated loans
Multi-Family Real Estate [Member] | Doubtful [Member]    
Risk rated loans
Multi-Family Real Estate [Member] | Loss [Member]    
Risk rated loans
Commercial Real Estate [Member]    
Risk rated loans 46,985 36,634
Commercial Real Estate [Member] | Pass [Member]    
Risk rated loans 42,814 31,050
Commercial Real Estate [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans 1,726 1,723
Commercial Real Estate [Member] | Sub-standard [Member]    
Risk rated loans 2,445 3,861
Commercial Real Estate [Member] | Doubtful [Member]    
Risk rated loans
Commercial Real Estate [Member] | Loss [Member]    
Risk rated loans
Land and Construction [Member]    
Risk rated loans 157 1,998
Land and Construction [Member] | Pass [Member]    
Risk rated loans 157 1,998
Land and Construction [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans
Land and Construction [Member] | Sub-standard [Member]    
Risk rated loans
Land and Construction [Member] | Doubtful [Member]    
Risk rated loans
Land and Construction [Member] | Loss [Member]    
Risk rated loans
Commercial [Member]    
Risk rated loans 4,779 4,997
Commercial [Member] | Pass [Member]    
Risk rated loans 3,967 2,362
Commercial [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans 707
Commercial [Member] | Sub-standard [Member]    
Risk rated loans 812 1,928
Commercial [Member] | Doubtful [Member]    
Risk rated loans
Commercial [Member] | Loss [Member]    
Risk rated loans
Consumer [Member]    
Risk rated loans 122 260
Consumer [Member] | Pass [Member]    
Risk rated loans 122 260
Consumer [Member] | OLEM (Other Loans Especially Mentioned) [Member]    
Risk rated loans
Consumer [Member] | Sub-standard [Member]    
Risk rated loans
Consumer [Member] | Doubtful [Member]    
Risk rated loans
Consumer [Member] | Loss [Member]    
Risk rated loans
v3.19.2
Loans - Schedule of Age Analysis of Past-due Loans (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Total Past Due
Current Loans 82,831 77,908
Nonaccrual Loans 1,380
Total Loans 82,831 79,288
Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Residential Real Estate [Member]    
Total Past Due
Current Loans 26,588 27,204
Nonaccrual Loans
Total Loans 26,588 27,204
Residential Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Residential Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Residential Real Estate [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Multi-Family Real Estate [Member]    
Total Past Due
Current Loans 4,200 8,195
Nonaccrual Loans
Total Loans 4,200 8,195
Multi-Family Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Multi-Family Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Multi-Family Real Estate [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Commercial Real Estate [Member]    
Total Past Due
Current Loans 46,985 35,254
Nonaccrual Loans 1,380
Total Loans 46,985 36,634
Commercial Real Estate [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Commercial Real Estate [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Commercial Real Estate [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Land and Construction [Member]    
Total Past Due
Current Loans 157 1,998
Nonaccrual Loans
Total Loans 157 1,998
Land and Construction [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Land and Construction [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Land and Construction [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Commercial [Member]    
Total Past Due
Current Loans 4,779 4,997
Nonaccrual Loans
Total Loans 4,779 4,997
Commercial [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Commercial [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Commercial [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
Consumer [Member]    
Total Past Due
Current Loans 122 260
Nonaccrual Loans
Total Loans 122 260
Consumer [Member] | Financing Receivables, 30 to 59 Days Past Due [Member]    
Total Past Due
Consumer [Member] | Financing Receivables, 60 to 89 Days Past Due [Member]    
Total Past Due
Consumer [Member] | Financing Receivables, Greater Than 90 Days Past Due [Member]    
Total Past Due
v3.19.2
Loans - Schedule of Impaired Loans (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Total: recorded investment $ 4,211 $ 6,743
Total: unpaid principal balance 4,211 6,743
Total: related allowance 791 1,244
Residential Real Estate [Member]    
Recorded Investment , With related allowance recorded 954 954
Unpaid Principal Balance, With related allowance recorded 954 954
Related Allowance, With related allowance recorded 268 268
Total: recorded investment 954 954
Total: unpaid principal balance 954 954
Total: related allowance 268 268
Commercial Real Estate [Member]    
Recorded Investment , With no related allowance recorded 2,445 2,259
Unpaid Principal Balance, With no related allowance recorded 2,445 2,259
Related Allowance, With no related allowance recorded
Recorded Investment , With related allowance recorded 1,602
Unpaid Principal Balance, With related allowance recorded 1,602
Related Allowance, With related allowance recorded 162
Total: recorded investment 2,445 3,861
Total: unpaid principal balance 2,445 3,861
Total: related allowance 162
Commercial [Member]    
Recorded Investment , With no related allowance recorded 1,114
Unpaid Principal Balance, With no related allowance recorded 1,114
Related Allowance, With no related allowance recorded
Recorded Investment , With related allowance recorded 812 814
Unpaid Principal Balance, With related allowance recorded 812 814
Related Allowance, With related allowance recorded 523 814
Total: recorded investment 812 1,928
Total: unpaid principal balance 812 1,928
Total: related allowance $ 523 $ 814
v3.19.2
Loans - Schedule of Interest Income Recognized and Received on Impaired Loans (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Impaired loans - Average Recorded Investment $ 4,714 $ 3,481 $ 5,559 $ 2,865
Impaired loans - Interest Income Recognized 70 50 141 98
Impaired loans - Interest Income Received 51 50 135 98
Residential Real Estate [Member]        
Impaired loans - Average Recorded Investment 954 968 952 1,000
Impaired loans - Interest Income Recognized 19 19 37 38
Impaired loans - Interest Income Received 19 19 37 38
Commercial Real Estate [Member]        
Impaired loans - Average Recorded Investment 2,461 226 3,059 546
Impaired loans - Interest Income Recognized 31 3 61 15
Impaired loans - Interest Income Received 21 3 59 15
Commercial [Member]        
Impaired loans - Average Recorded Investment 1,302 2,287    
Impaired loans - Interest Income Recognized 20 28    
Impaired loans - Interest Income Received $ 11 $ 28    
Commercial [Member]        
Impaired loans - Average Recorded Investment     1,548 1,319
Impaired loans - Interest Income Recognized     43 45
Impaired loans - Interest Income Received     $ 39 $ 45
v3.19.2
(Loss) Earnings Per Share - Schedule of Weighted Average Number of Common Shares Outstanding (Details) - shares
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Jun. 30, 2019
Jun. 30, 2018
Earnings Per Share [Abstract]        
Weighted-average number of common shares outstanding used to calculate basic and diluted loss per common share 1,881,759 1,409,904 1,869,933 1,292,381
v3.19.2
Stock-Based Compensation (Details Narrative) - USD ($)
$ / shares in Units, $ in Thousands
 3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Jun. 30, 2018
Dec. 31, 2018
Dec. 31, 2017
Dec. 31, 2016
Accrued compensation expense       $ 200 $ 200 $ 200
Common stock issued as compensation to directors for services, shares         105,820 105,820
Compensation expense   $ 201      
Director [Member]            
Share-based compensation shares issued 58,309     36,101 2,821  
Slae of common stock       20,814    
Conversion of stock issued during period       79,186    
Convertible preferred stock, shares issued upon conversion       7    
Accrued compensation expense         $ 8,858  
Shares issued price per share         $ 3.14  
Compensation expense $ 200,000          
2011 Equity Incentive Plan [Member]            
Share-based compensation number of shares authorized 210,000 210,000        
2018 Equity Incentive Plan [Member]            
Share-based compensation number of shares authorized 250,000 250,000        
Share-based compensation shares issued   157,190        
Share-based compensation remain available for grant 92,810 92,810        
v3.19.2
Fair Value Measurements (Details Narrative) - shares
 6 Months Ended
Jun. 30, 2019
Jun. 30, 2018
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]    
Securities transferred amount
Significant Other Observable Inputs (Level 2) [Member]    
Securities transferred amount
Significant Unobservable Inputs (Level 3) [Member]    
Securities transferred amount
v3.19.2
Fair Value Measurements - Schedule of Assets Measured On Nonrecurring Basis (Details) - USD ($)
$ in Thousands
 6 Months Ended 12 Months Ended
Jun. 30, 2019
Dec. 31, 2018
Significant Unobservable Inputs (Level 3) [Member]    
Loans receivable, fair value $ 77,062
Fair Value Measurements Nonrecurring [Member]    
Loans receivable, fair value   339
Losses recorded in operations during the period  
Fair Value Measurements Nonrecurring [Member] | Fair Value [Member]    
Loans receivable, fair value   1,998
Fair Value Measurements Nonrecurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]    
Loans receivable, fair value  
Fair Value Measurements Nonrecurring [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Loans receivable, fair value  
Fair Value Measurements Nonrecurring [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Loans receivable, fair value   1,998
Fair Value Measurements Nonrecurring [Member] | Residential Real Estate [Member]    
Loans receivable, fair value 268 268
Losses recorded in operations during the period
Fair Value Measurements Nonrecurring [Member] | Residential Real Estate [Member] | Fair Value [Member]    
Loans receivable, fair value 686 686
Fair Value Measurements Nonrecurring [Member] | Residential Real Estate [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]    
Loans receivable, fair value
Fair Value Measurements Nonrecurring [Member] | Residential Real Estate [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Loans receivable, fair value
Fair Value Measurements Nonrecurring [Member] | Residential Real Estate [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Loans receivable, fair value $ 686 686
Fair Value Measurements Nonrecurring [Member] | Commercial Real Estate [Member]    
Loans receivable, fair value   71
Losses recorded in operations during the period  
Fair Value Measurements Nonrecurring [Member] | Commercial Real Estate [Member] | Fair Value [Member]    
Loans receivable, fair value   1,312
Fair Value Measurements Nonrecurring [Member] | Commercial Real Estate [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]    
Loans receivable, fair value  
Fair Value Measurements Nonrecurring [Member] | Commercial Real Estate [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Loans receivable, fair value  
Fair Value Measurements Nonrecurring [Member] | Commercial Real Estate [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Loans receivable, fair value   $ 1,312
v3.19.2
Fair Value Measurements - Schedule of Available-for-Sale Securities Measured at Fair Value On Recurring Basis (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Available-for-sale securities $ 6,213 $ 2,359
SBA Pool Securities [Member]    
Available-for-sale securities 2,058 2,359
Collateralized Mortgage Obligations [Member]    
Available-for-sale securities 1,212  
Mortgage Backed Securities [Member]    
Available-for-sale securities 2,943  
Significant Other Observable Inputs (Level 2) [Member]    
Available-for-sale securities 6,213 2,359
Fair Value, Measurements, Recurring [Member] | Fair Value [Member]    
Available-for-sale securities 6,213  
Fair Value, Measurements, Recurring [Member] | Fair Value [Member] | SBA Pool Securities [Member]    
Available-for-sale securities 2,058 2,359
Fair Value, Measurements, Recurring [Member] | Fair Value [Member] | Collateralized Mortgage Obligations [Member]    
Available-for-sale securities 1,212  
Fair Value, Measurements, Recurring [Member] | Fair Value [Member] | Mortgage Backed Securities [Member]    
Available-for-sale securities 2,943  
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]    
Available-for-sale securities  
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | SBA Pool Securities [Member]    
Available-for-sale securities
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Collateralized Mortgage Obligations [Member]    
Available-for-sale securities  
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Mortgage Backed Securities [Member]    
Available-for-sale securities  
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]    
Available-for-sale securities 6,213  
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | SBA Pool Securities [Member]    
Available-for-sale securities 2,058 2,359
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Collateralized Mortgage Obligations [Member]    
Available-for-sale securities 1,212  
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Mortgage Backed Securities [Member]    
Available-for-sale securities 2,943  
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]    
Available-for-sale securities  
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | SBA Pool Securities [Member]    
Available-for-sale securities
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Collateralized Mortgage Obligations [Member]    
Available-for-sale securities  
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Mortgage Backed Securities [Member]    
Available-for-sale securities  
v3.19.2
Fair Value of Financial Instruments - Schedule of Estimated Fair Value of Financial Instruments (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Apr. 30, 2018
Securities available for sale $ 6,213 $ 2,359  
Securities held-to-maturity 6,632 7,139 $ 7,945
Accrued interest receivable 370 314  
Federal funds purchased 560  
Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]      
Cash and cash equivalents 12,317 7,983  
Significant Other Observable Inputs (Level 2) [Member]      
Securities available for sale 6,213 2,359  
Securities held-to-maturity 6,874 7,175  
Significant Unobservable Inputs (Level 3) [Member]      
Loans 77,062  
Federal Home Loan Bank stock 642 1,132  
Accrued interest receivable 370 314  
Deposit liabilities 62,243  
Federal Home Loan Bank advances 12,776 24,437  
Junior subordinated debenture  
Federal funds purchased 560  
Off-balance sheet financial instruments  
Carrying Amount [Member]      
Cash and cash equivalents 12,317 7,983  
Securities available for sale 6,213 2,359  
Securities held-to-maturity 6,632 7,139  
Loans 80,861 77,200  
Federal Home Loan Bank stock 642 1,132  
Accrued interest receivable 370 314  
Deposit liabilities 85,901 62,378  
Federal Home Loan Bank advances 13,000 24,600  
Junior subordinated debenture 5,155 5,155  
Federal funds purchased 560  
Off-balance sheet financial instruments  
Fair Value [Member]      
Cash and cash equivalents 12,317 7,983  
Securities available for sale 6,213 2,359  
Securities held-to-maturity 6,874 7,175  
Loans 80,544 77,062  
Federal Home Loan Bank stock 642 1,132  
Accrued interest receivable 370 314  
Deposit liabilities 85,847 62,243  
Federal Home Loan Bank advances 12,807 24,437  
Junior subordinated debenture [1]  
Federal funds purchased 560  
Off-balance sheet financial instruments  
[1] The Company is unable to determine value based on significant unobservable inputs required in the calculation. Refer to Note 10 for further information.
v3.19.2
Off- Balance Sheet Financial Instruments - Schedule of Off-Balance Sheet Risks of Financial Instruments (Details)
$ in Thousands
Jun. 30, 2019
USD ($)
Fair Value Disclosures [Abstract]  
Commitments to extend credit $ 3,894
Unused lines of credit 2,962
Standby letters of credit
v3.19.2
Regulatory Matters (Details Narrative)
Jun. 30, 2019
Banking and Thrift [Abstract]  
Minimum requirement of capital conservation buffer, ratio 2.50%
v3.19.2
Regulatory Matters - Schedule of Capital Amounts, Ratios and Regulatory Thresholds (Details) - USD ($)
$ in Thousands
Jun. 30, 2019
Dec. 31, 2018
Banking and Thrift [Abstract]    
Total Capital to Risk-weighted Assets $ 12,193 $ 12,155
Total Capital to Risk-weighted Assets, Ratio 14.61% 15.86%
Tier I Capital to Risk-weighted Assets $ 11,138 $ 11,181
Tier I Capital to Risk-weighted Assets, Ratio 13.35% 14.59%
Common Equity Tier 1 Capital to Risk-weighted Assets $ 11,138 $ 11,181
Common Equity Tier 1 Capital to Risk-weighted Assets, Ratio 13.35% 14.59%
Tier I Capital to Total Assets $ 11,138 $ 11,181
Tier I Capital to Total Assets, Ratio 10.31% 11.68%
Minimum Amount of Total Capital to Risk-weighted Assets for Adequacy Purposes $ 6,676 $ 6,132
Minimum Amount of Total Capital to Risk-weighted Assets for Adequacy Purposes, Ratio 8.00% 8.00%
Minimum Amount of Tier I Capital to Risk-Weighted Assets for Adequacy Purposes $ 5,007 $ 4,599
Minimum Amount of Tier I Capital to Risk-Weighted Assets for Adequacy Purposes, Ratio 6.00% 6.00%
Minimum Amount of Common Equity Tier 1 Capital to Risk-weighted Assets for Adequacy Purposes $ 3,755 $ 3,449
Minimum Amount of Common Equity Tier 1 Capital to Risk-weighted Assets for Adequacy Purposes, Ratio 4.50% 4.50%
Minimum Amount of Tier I Capital to Total Assets for Adequacy Purposes $ 4,323 $ 3,828
Minimum Amount of Tier I Capital to Total Assets for Adequacy Purposes, Ratio 4.00% 4.00%
Minimum Total Capital to Risk-Weighted Assets Required to be Well-capitalized $ 8,344 $ 7,665
Minimum Total Capital to Risk-Weighted Assets Required to be Well-capitalized, Ratio 10.00% 10.00%
Minimum Tier I Capital to Risk-Weighted Assets Required to be Well-capitalized $ 6,626 $ 6,132
Minimum Tier I Capital to Risk-Weighted Assets Required to be Well-capitalized, Ratio 8.00% 8.00%
Minimum Common Equity Tier I Capital to Risk-weighted Assets to be Well-capitalized $ 5,424 $ 4,983
Minimum Common Equity Tier I Capital to Risk-weighted Assets to be Well-capitalized, Ratio 6.50% 6.50%
Minimum Tier I Capital to Total Assets Required to be Well-capitalized $ 5,404 $ 4,785
Minimum Tier I Capital to Total Assets Required to be Well-capitalized, Ratio 5.00% 5.00%
v3.19.2
Junior Subordinated Debenture (Details Narrative) - USD ($)
$ in Thousands
 1 Months Ended 3 Months Ended 6 Months Ended
Sep. 30, 2004
May 31, 2018
Sep. 30, 2018
Jun. 30, 2019
Junior subordinated debenture principal balance plus accrued and unpaid interest amount $ 5,155      
Number of trust preferred securities issued       5,000
Debenture term 30 years      
Debt instrument interest rate stated 6.40%      
Debt interest rate terms The interest rate was fixed at 6.40% for the first five years, and thereafter, the coupon rate floats quarterly at the three-month LIBOR rate plus 2.45% (4.77% at June 30, 2019).      
Deferred interest payments on debenture       $ 1,864
Optimum Bank Holdings Capital Trust I [Member]        
Number of trust preferred securities issued       5,000
Remaining trust preferred securities       4,306
New Holder [Member]        
Trust preferred securities repurchased   5,000    
New Holder [Member] | Several Unaffiliated Third Parties [Member]        
Number of trust preferred securities issued     694  
Conversion of stock, shares converted     301,778  
LIBOR [Member]        
Variable interest rate 2.45%     4.77%
v3.19.2
Branch Relocation (Details Narrative) - Sales Contract [Member]
$ in Thousands
 1 Months Ended
Jun. 30, 2019
USD ($)
Branch location sale price $ 1,400
Financed amount $ 1,050
v3.19.2
Lease (Details Narrative)
Jun. 30, 2019
Leases [Abstract]  
Operating remaining lease term 3 years 4 months 24 days
v3.19.2
Lease - Schedule of Components of Lease Cost (Details) - USD ($)
$ in Thousands
 3 Months Ended 6 Months Ended
Jun. 30, 2019
Jun. 30, 2019
Leases [Abstract]    
Operating Lease Cost $ 19 $ 38
Cash paid for amounts included in measurement of lease liabilities $ 18 $ 36
v3.19.2
Lease - Schedule of Operating Lease Liability (Details)
$ in Thousands
Jun. 30, 2019
USD ($)
Leases [Abstract]  
Operating lease right-of-use asset $ 246
Operating lease liability $ 248
Weighted-average remaining lease term 3 years 4 months 24 days
Weighted-average discount rate 2.60%
v3.19.2
Lease - Schedule of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Details)
$ in Thousands
Jun. 30, 2019
USD ($)
Leases [Abstract]  
Remainder of 2019 $ 36
2020 75
2021 77
2022 72
Total future minimum lease payments 260
Less imputed interest (12)
Total operating lease liability $ 248