OptimumBank Holdings, Inc. Income Taxes Disclosure

(10) Income Taxes

 

Pretax income is entirely related to domestic activities. The Company did not have any foreign operations.

 

Income taxes consisted of the following:

 Schedule of Components of Income Tax Benefit

		Year Ended December 31,
(dollars in thousands)		2025				2024
Current:
Federal		$	4,740			$	3,486
State			1,245				1,011
Total current			5,985				4,497
Deferred:
Federal			(393	)			9
State			(69	)			1
Total deferred income taxes (benefit)			(462	)			10
Total income taxes		$	5,523			$	4,507

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

 

(10) Income Taxes Continued

 

The Company did not have any income tax expense (benefit) in foreign jurisdictions.

 

The reasons for the differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows:

Schedule of Effective Income Tax Rate Reconciliation

		Year Ended December 31,
		2025
						% of
(dollars in thousands)		Amount				Pretax Loss
Federal statutory income tax		$	4,656				21.0	%
Effect of:
State income tax, net of federal income tax effect*			919				4.1	%
Nontaxable or nondeductible items
Other			(47	)			(0.2	)%
Other items, net			(5	)			0.0	%
Income tax expense		$	5,523				24.9	%

 

*

State taxes in Florida made up the majority (greater than 50 percent) of the tax effect in this category.

 

		Year Ended December 31,
		2024
						% of
(dollars in thousands)		Amount				Pretax Loss
Income tax benefit at statutory rate		$	3,703				21.0	%
Increase (decrease) resulting from:
State taxes, net of Federal tax benefit			799				4.5	%
Other permanent differences			5				0.1	%
Income tax expense		$	4,507				25.6	%

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements

 

(10) Income Taxes, Continued

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

 Schedule of Deferred Tax Assets and Deferred Tax Liabilities

		At December 31,
(dollars in thousands)		2025				2024
Deferred tax assets:
Net operating loss carryforwards		$	31			$	36
Allowance for loan losses			2,439				1,849
Nonaccrual loan interest			—				19
Accrued expense			255				208
Operating lease liabilities			695				709
Unrealized loss on debt securities			1,558				1,913
Other			12				—
Total deferred tax assets		$	4,990			$	4,734
Deferred tax liabilities:
Premises and equipment			(298	)			(208	)
Right of use lease assets			(662	)			(685	)
Loan costs			(922	)			(840	)
Total deferred tax liabilities			(1,882	)			(1,733	)
Net deferred tax asset		$	3,108			$	3,001

 

A valuation allowance for deferred tax assets is recorded when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and tax planning strategies which will create taxable income during the periods in which those temporary differences become deductible. At December 31, 2025, the Company’s management assessed whether the valuation allowance is required based on its earnings history, trend over the past year, and its estimate of future earnings. Management concluded from its assessment that it was more likely than not that the deferred tax assets would be realizable, and therefore, no valuation allowance was recorded.

 

At December 31, 2025, the Company had net operating loss carryforwards of approximately $120,000 for Federal and Florida tax purposes available to offset future taxable income. These carryforwards will begin to expire in 2029. A portion of the Federal and Florida net operating losses are subject to Internal Revenue Code (“IRC”) Section 382 limitations.

 

The Company files U.S., Florida, and Illinois income tax returns. The Company is no longer subject to U.S. Federal or state income tax examinations by taxing authorities for years before 2022.

 

The Company regularly reviews its tax positions in each significant taxing jurisdiction in the process of evaluating its unrecognized tax benefits. The Company makes adjustments to its unrecognized tax benefits when: (i) facts and circumstances regarding a tax position change, causing a change in management’s judgment regarding that tax position; (ii) a tax position is effectively settled with a tax authority at a differing amount; and/or (iii) the statute of limitations expires regarding a tax position. The Company does not expect a change in unrecognized tax benefits in the next 12 months.

 

(continued)

 

 

OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARIES

 

Notes to Consolidated Financial Statements