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|                                  
|----------------------------------
|SECURITIES AND EXCHANGE COMMISSION
|Washington, DC 20549              
|                                  
|FORM
 10-KSB                      

| |   |                                            | 
| | - | ------------------------------------------ | 
| | x | ANNUAL REPORT UNDER SECTION 13 or 15(d) OF | 
| |   | THE SECURITIES EXCHANGE ACT OF 1934        | 

For the Fiscal Year Ended December
31, 2007

OR

| |   |                                                | 
| | - | ---------------------------------------------- | 
| | o | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF | 
| |   | THE SECURITIES EXCHANGE ACT
 OF 1934           | 

Commission File Number: 0001288855

|                                                            
|------------------------------------------------------------
|OPTIMUMBANK
 HOLDINGS, INC.                                 
|                                                            
|(Name of small business
 Issuer as specified in its charter)

|                                                                 |  |            |                                       | 
|---------------------------------------------------------------- |  | ---------- | ------------------------------------- | 
|Florida                                                          |  |            | 55-0865043                            | 
|(State or other
 jurisdiction
 of incorporation or organization) |  |            | (I.R.S. Employer
 Identification No.) | 
|                                                                 |  |            |                                       | 
|                                                                 |  |            |                                       | 
|2477
 East Commercial Boulevard, Fort Lauderdale, Florida        |  | 33308      |                                      
|(Address of principal executive offices)                         |  | (Zip Code) |                                      

|                                                                 
|-----------------------------------------------------------------
|Issuers telephone
 number, including area code: (954) 776-2332  
|                                                                 
|Securities registered
 pursuant to Section 12(b) of the Act: None
|Securities registered
 pursuant to Section 12(g) of the Act:     
|                                                                 
|Common Stock, par value $.01 per
 share                          
|(Title of Class)                                                 

Check
whether the issuer has (1) filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the issuer was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. YES x   NO o

Check
if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuers knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-KSB. x

The
issuers revenues for its most recent fiscal year were $16,670,000.

The
aggregate market value of the Common Stock of the issuer held by non-affiliates
of the issuer (2,003,144
shares) on March 7, 2008, was approximately $18,028,296. The aggregate
market value was computed by reference to the closing market price of the
Common Stock of the issuer at $9.00 per share on March 7, 2008. For the
purposes of this response, directors and executive officers are considered the
affiliates of the issuer at that date.

As
of March 7, 2008, there were issued and outstanding 2,972,507 shares of the
issuers Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Proxy Statement for the Annual Meeting of Shareholders to be held on
April 24, 2008 to be filed with the Securities and Exchange Commission pursuant
to Regulation 14A within 120 days of the issuers fiscal year end are
incorporated into Part III, Items 9 through 12, and 14, of this Annual Report
on Form 10-KSB.

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TABLE
OF CONTENTS

|                                    |                                                                                                                   |                                               |    |     
|----------------------------------- | ----------------------------------------------------------------------------------------------------------------- | --------------------------------------------- | -- | ----
|                                    |                                                                                                                   |                                               |    | Page
|                                    |                                                                                                                   |                                               |    |     
|                                    |                                                                                                                   |                                               |    |     
|PART I                              |                                                                                                                   |                                               |    | 1   
|                                    |                                                                                                                   |                                               |    |     
|Item 1.                             | Business                                                                                                          |                                               |   
|                                    |                                                                                                                   | Forward-Looking Statements                    |    | 1   
|                                    |                                                                                                                   | General                                       |    | 1   
|                                    |                                                                                                                   | Recent Events                                 |    | 1   
|                                    |                                                                                                                   | Banking Products                              |    | 1   
|                                    |                                                                                                                   | Strategy                                      |    | 2   
|                                    |                                                                                                                   | Lending Activities                            |    | 2   
|                                    |                                                                                                                   | Deposit Activities                            |    | 3   
|                                    |                                                                                                                   | Investments                                   |    | 3   
|                                    |                                                                                                                   | Correspondent Banking                         |    | 3   
|                                    |                                                                                                                   | Data Processing                               |    | 3   
|                                    |                                                                                                                   | Internet Banking                              |    | 3   
|                                    |                                                                                                                   | Competition                                   |    | 4   
|                                    |                                                                                                                   | Employees                                     |    | 4   
|                                    |                                                                                                                   | Supervision and Regulation                    |    | 4   
|                                    |                                                                                                                   | Statistical Profile and Other
 Financial Data |    | 8   
|                                    |                                                                                                                   |                                               |    |     
|Item 2.                             | Properties                                                                                                        |                                               | 8 
|                                    |                                                                                                                   |                                               |   
|Item 3.                             | Legal Proceedings                                                                                                 |                                               | 9 
|                                    |                                                                                                                   |                                               |   
|Item 4.                             | Submission of Matters to a Vote of
 Security Holders                                                              |                                               | 9 
|                                    |                                                                                                                   |                                               |   
|PART II                             |                                                                                                                   | 9                                            
|                                    |                                                                                                                   |                                              
|Item 5.                             | Market for the Registrants Common
 Equity and Related Stockholder Matters                                        |                                               | 9 
|                                    |                                                                                                                   |                                               |   
|Item 6.                             | Managements Discussion and Analysis
 of Financial Condition and Results of Operations                            |                                               | 10
|                                    |                                                                                                                   |                                               |   
|Item 7.                             | Financial Statements                                                                                              |                                               | 28
|                                    |                                                                                                                   |                                               |   
|Item 8.                             | Changes in and Disagreements with
 Accountants on Accounting and Financial Disclosure                             |                                               | 28
|                                    |                                                                                                                   |                                               |   
|Item 8A(T). Controls and Procedures |                                                                                                                   | 28                                           
|                                    |                                                                                                                   |                                              
|Item 8B.                            | Other Information                                                                                                 |                                               | 29
|                                    |                                                                                                                   |                                               |    |     
|PART III                            |                                                                                                                   | 29                                           
|                                    |                                                                                                                   |                                              
|Item 9.                             | Directors, Executive Officers,
 Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
 Act |                                               | 29
|                                    |                                                                                                                   |                                               |   
|Item 10.                            | Executive Compensation                                                                                            |                                               | 29
|                                    |                                                                                                                   |                                               |   
|Item 11.                            | Security Ownership of Certain
 Beneficial Owners and Management                                                   |                                               | 29
|                                    |                                                                                                                   |                                               |   
|Item 12.                            | Certain Relationships and Related
 Transactions and Director Independence                                         |                                               | 30
|                                    |                                                                                                                   |                                               |   
|Item 13.                            | Exhibits                                                                                                          |                                               | 31
|                                    |                                                                                                                   |                                               |   
|Item 14.                            | Principal Accountant Fees and
 Services                                                                           |                                               | 31
|                                    |                                                                                                                   |                                               |   
|SIGNATURES                          |                                                                                                                   | 32                                           

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PART I

|        |         
|------- | --------
|Item 1. | Business

Forward-Looking Statements

We
have made forward-looking statements in this Annual Report about the financial
condition, results of operations, and business of our company. These statements
are not historical facts and include expressions concerning the future that are
subject to risks and uncertainties. Factors that may cause actual results to
differ materially from those contemplated by such forward-looking statements
include, among other things, the following possibilities:

| |   |                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | general economic conditions, either nationally or
 regionally, that are less favorable than expected resulting in, among other
 things, a deterioration in credit quality and an increase in credit
 risk-related losses and expenses;
| |   |                                                                                                                                                                                                                                       
| |  | changes in the interest rate environment that reduce
 margins;                                                                                                                                                                        
| |   |                                                                                                                                                                                                                                       
| |  | competitive pressure in the banking industry that
 increases significantly;                                                                                                                                                           
| |   |                                                                                                                                                                                                                                       
| |  | changes that occur in the regulatory environment;
 and                                                                                                                                                                                
| |   |                                                                                                                                                                                                                                       
| |  | changes that occur in business conditions and the
 rate of inflation.                                                                                                                                                                 

When
used in this Annual Report, the words believes, estimates, plans,
expects, should, may, might, outlook, and anticipates, as
well as
similar expressions, as they relate to OptimumBank Holdings, Inc., or its
management, are intended to identify forward-looking statements.

General

OptimumBank
Holdings, Inc. was formed in 2004 as a Florida corporation to serve as a
one-bank holding company for OptimumBank and acquired all of the shares of
OptimumBank in May 2004. Our only business is the ownership and operation of
OptimumBank. OptimumBank is a Florida chartered bank which opened in November
2000, and its deposits are insured by the Federal Deposit Insurance Corporation,
or FDIC. OptimumBank provides community banking services to individuals and
businesses in Broward, Miami-Dade and Palm Beach counties. OptimumBank conducts
operations from its Fort Lauderdale headquarters and three branch offices in
Fort Lauderdale, Plantation and Deerfield Beach.

OptimumBank
Holdings is subject to the supervision and regulation of the Federal Reserve.
OptimumBank is subject to the supervision and regulation of the Florida Office
of Financial Regulation and the FDIC. OptimumBank is a member of the Federal
Home Loan Bank of Atlanta.

At
December 31, 2007, our company had total assets of $241.5 million, net loans of
$173.3 million, total deposits of $125.0 million and stockholders equity of
$22.2 million. During 2007, our company had net earnings of $1,742,000.

Banking Products

Our
revenues are primarily derived from interest on, and fees received in
connection with, real estate, and other loans, and from interest from
mortgage-backed securities and short-term investments. The principal sources of
funds for our lending activities are deposits, borrowings, repayment of loans,
and the repayment, or maturity of investment securities. Our principal expenses
are the interest paid on deposits, and operating and general administrative
expenses.

As
is the case with banking institutions generally, our operations are materially
and significantly influenced by general economic conditions and by related
monetary and fiscal policies of financial institution regulatory agencies,
including the Board of Governors of the Federal Reserve System and the FDIC.
Deposit flows and costs of funds are influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
affected by the demand for financing of real estate and other types of loans,
which in turn is affected by the interest rates at which such financing may be
offered and other factors affecting local demand and availability of funds. We
face strong competition in attracting deposits (our primary source of lendable
funds) and originating loans.

We
provide a range of consumer and commercial banking services to individuals and
businesses. The basic services we offer include: demand interest-bearing and
noninterest-bearing accounts, money market deposit accounts, NOW accounts, time
deposits, credit cards, cash management, direct deposits, notary services,
money orders, night depository, travelers checks, cashiers checks, domestic
collections, savings bonds, bank drafts, automated teller services, drive-in
tellers, and banking by mail. In addition, we make residential and commercial
real estate loans and consumer loans. We provide ATM cards, as a part of the
Star, Presto and Cirrus networks, thereby permitting customers to utilize the
convenience of ATMs worldwide. We do not have trust powers and provide no trust
services.

1

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Strategy

Our
continuing goal is to become one of the leading community banking organizations
in Broward County. We expect to accomplish our goal through steady, reasonable
and controlled growth and a prudent operating strategy.

Our
operating and business strategy emphasizes:

| |    |                                                                                                                                                                                                                                                             
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1. | Local management and local decision making resulting
 in rapid, personalized customer service, rapid credit decisions and expedited
 closings;                                                                                                              
| |    |                                                                                                                                                                                                                                                             
| | 2. | Maintaining our presence in Broward County through a
 branch network- we currently have three branch banking offices in Broward
 County;                                                                                                                    
| |    |                                                                                                                                                                                                                                                             
| | 3. | Real estate lending activities by continuing to
 originate adjustable rate residential and commercial mortgage loans for our
 customers;                                                                                                                    
| |    |                                                                                                                                                                                                                                                             
| | 4. | Maintaining high credit quality through strict
 underwriting criteria and our knowledge of the real estate values in our
 market area;                                                                                                                      
| |    |                                                                                                                                                                                                                                                             
| | 5. | Personalized products and service - we strive to
 provide innovative financial products, high service levels and to maintain
 strong customer relationships. We seek customers who prefer to conduct
 business with a locally owned and managed institution.

Lending
Activities

We
offer primarily real estate and to a lesser extent, consumer loans, to
individuals and small businesses and other organizations that are located in or
conduct a substantial portion of their business in our market area. Our market
area consists of the tri-county area of Broward, Miami-Dade and Palm Beach
counties. Our net loans at December 31, 2007 were $173.3 million, or 71.8% of
total assets. The interest rates we charge on loans vary with the degree of
risk, maturity, and amount of the loan, and are further subject to competitive
pressures, money market rates, availability of funds, and government
regulations. We have no foreign loans or loans for highly leveraged transactions.

Our
loans are concentrated in two major areas: residential and commercial real
estate loans. As of December 31, 2007, 100% of our loan portfolio consisted of
loans secured by mortgages on real estate, of which approximately 38.1% of the
total loan portfolio was secured by one-to-four family residential properties.
Our real estate loans are located primarily in our tri-county market area.

Our
real estate loans are secured by mortgages and consist primarily of loans to
individuals and businesses for the purchase or improvement of, or investment in
real estate. These real estate loans may be made at fixed or variable interest
rates and are normally adjustable rate mortgages which adjust annually after
the initial three to five year period. Our fixed rate loans generally are for
terms of five years or less, and are repayable in monthly installments based on
a maximum 30-year amortization schedule.

Loan
originations are derived primarily from existing customers, direct marketing
and independent mortgage brokers that process our loans. We pay fees to these
brokers in connection with their services; however, we perform the underwriting
and approval of each of the loans we fund.

Certain
credit risks are inherent in making loans. These include prepayment risks,
risks resulting from uncertainties in the future value of collateral, risks
resulting from changes in economic and industry conditions including interest
rates, and risks inherent in dealing with individual borrowers. We attempt to
minimize credit losses through various means. On larger credits, we rely on the
cash flow and assets of a debtor as the source of repayment as well as the
value of the underlying collateral. We also generally limit our loans to 80% of
the value of the underlying real estate collateral. We generally charge a
prepayment penalty if a loan is repaid within the first two to three years of
origination to recover any fees we paid for the origination of the loan.

2

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Deposit Activities

Deposits
are the major source of our funds for lending and other investment activities.
We consider the majority of our regular savings, demand, NOW, money market
deposit accounts and CDs under $100,000 to be core deposits. These accounts
comprised approximately 68.9% of our total deposits at December 31, 2007.
Approximately 76.4% of our deposits at December 31, 2007 were certificates of
deposit. Generally, we attempt to maintain the rates paid on our deposits at a
competitive level. Time deposits of $100,000 and over made up approximately
31.1% of our total deposits at December 31, 2007. Although these large deposits
are not traditionally considered core deposits, the majority of these deposits
have served as a stable source of funds in our targeted market. The majority of
our deposits are generated from Broward County.

We
may use brokered deposits to facilitate the funding of our mortgage lending
activities in circumstances when larger than anticipated loan volumes occur and
there is not enough time to fund the additional loan demand through traditional
deposit solicitation. The time frame from the initial order to the final
funding of brokered deposits is generally one to three days. The rates paid on
these brokered deposits are typically equal to or slightly less than the high
end of the interest rates in OptimumBanks competitive market area. Brokered
deposits amounted to 6.0% and 6.4% of our total deposits at December 31, 2007
and 2006, respectively.

Investments

We
invest a portion of our assets in U.S. Government agency obligations and
federal funds sold. Our investments are managed in relation to loan demand and
deposit growth, and are generally used to provide for the investment of excess
funds with minimal risk and for liquidity to fund increases in loan demand or
to offset fluctuations in deposits.

Our
total investment portfolio may be invested in U.S. Treasury and general
obligations of its agencies because such securities generally represent a
minimal investment risk. Mortgage-backed securities generally have a shorter
life than the stated maturity. Federal funds sold is the excess cash we have
available over and above daily cash needs. This money is invested on an
overnight basis with approved correspondent banks.

We
monitor changes in financial markets. In addition to investments for our
portfolio, we monitor our daily cash position to ensure that all available
funds earn interest at the earliest possible date. A portion of the investment
account is designated as secondary reserves and invested in liquid securities
that can be readily converted to cash with minimum risk of market loss. These
investments usually consist of U.S. Treasury obligations, U.S. government
agencies and federal funds. The remainder of the investment account may be
placed in investment securities of different type and longer maturity. Daily
surplus funds are sold in the federal funds market for one business day. We
attempt to stagger the maturities of our securities so as to produce a steady
cash flow in the event we need cash.

Correspondent Banking

Correspondent
banking involves one bank providing services to another bank which cannot
provide that service for itself from an economic or practical standpoint. We
are required to purchase correspondent services offered by larger banks,
including check collections, purchase of federal funds, security safekeeping,
investment services, coin and currency supplies, overline and liquidity loan
participations, and sales of loans to or participations with correspondent
banks.

We
have established a correspondent relationship with Independent Bankers Bank of
Florida. We pay for such services in cash as opposed to keeping compensating
balances. We also sell loan participations to other banks with respect to loans
which exceed our lending limit.

Data Processing

We
outsource most of our data processing services, including an automated general
ledger and deposit accounting; however, we service all our loans in-house.

Internet Banking

We
maintain a website at www.optimumbank.com
where customers can access account balances, view current account activity and
their previous statement, view images of paid checks and transfer funds between
accounts. Our website provides information regarding our Visa credit card
offering.

3

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Competition

We
encounter strong competition both in making loans and in attracting deposits.
The deregulation of the banking industry and the widespread enactment of state
laws which permit multi-bank holding companies as well as an increasing level
of interstate banking have created a highly competitive environment for
commercial banking. In one or more aspects of our business, we compete with
other commercial banks, savings and loan associations, credit unions, finance
companies, mutual funds, insurance companies, brokerage and investment banking
companies, and other financial intermediaries. Most of these competitors, some
of which are affiliated with bank holding companies, have substantially greater
resources and lending limits, and may offer certain services that we do not
currently provide. In addition, many of our non-bank competitors are not
subject to the same extensive federal regulations that govern federally insured
banks. Recent federal and state legislation has heightened the competitive
environment in which financial institutions must conduct their business, and
the potential for competition among financial institutions of all types has increased
significantly.

To
compete, we rely upon specialized services, responsive handling of customer
needs, and personal contacts by our officers, directors, and staff. Large
multi-branch banking competitors tend to compete primarily by rate and the
number and location of branches while smaller, independent financial
institutions tend to compete primarily by rate and personal service.

Employees

As
of December 31, 2007, we had 19 full-time employees, including executive
officers. The employees are not represented by a collective bargaining unit. We
consider relations with employees to be good.

Supervision and Regulation

Banks
and their holding companies are extensively regulated under both federal and
state law. The following is a brief summary of certain statutes, rules, and
regulations affecting OptimumBank Holdings and OptimumBank. This summary is
qualified in its entirety by reference to the particular statutory and
regulatory provisions referred to below and is not intended to be an exhaustive
description of the statutes or regulations applicable to the business of our
company and our bank. Supervision, regulation, and examination of banks by
regulatory agencies are intended primarily for the protection of depositors,
rather than shareholders.

Company Regulation

General.
As a bank holding company registered under the Bank Holding Company Act of 1956
(the BHCA), OptimumBank Holdings is subject to the regulation and supervision
of, and inspection by, the Federal Reserve Board (Federal Reserve).
OptimumBank Holdings also is required to file with the Federal Reserve annual
reports and other information regarding its business operations, and those of
its subsidiaries. In the past, the BHCA limited the activities of bank holding
companies and their subsidiaries to activities which were limited to banking,
managing or controlling banks, furnishing services to or performing services
for their subsidiaries or engaging in any other activity which the Federal Reserve
determined to be so closely related to banking or managing or controlling banks
as to be properly incident thereto. Under the Gramm-Leach-Bliley Financial
Modernization Act of 1999 which is discussed below, bank holding companies now
have the opportunity to seek broadened authority, subject to limitations on
investment, to engage in activities that are financial in nature if all of
their subsidiary depository institutions are well capitalized, well managed,
and have at least a satisfactory rating under the Community Reinvestment Act,
which is also discussed below.

In
this regard, the BHCA prohibits a bank holding company, with certain limited
exceptions, from (i) acquiring or retaining direct or indirect ownership or
control of more than 5% of the outstanding voting stock of any company which is
not a bank or bank holding company, or (ii) engaging directly or indirectly in
activities other than those of banking, managing or controlling banks, or
performing services for its subsidiaries, unless such non-banking business is
determined by the FRB to be so closely related to banking or managing or
controlling banks as to be properly incident thereto. In making such
determinations, the FRB is required to weigh the expected benefit to the public,
such as greater convenience, increased competition or gains in efficiency,
against the possible adverse effects, such as undue concentration of resources,
decreased or unfair competition, conflicts of interest, or unsound banking
practices. Generally, bank holding companies, such as OptimumBank Holdings, are
required to obtain prior approval of the Federal Reserve to engage in any new
activity not previously approved by the Federal Reserve.

4

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Change of Holding Company Control.
The BHCA also requires that every bank holding company obtain the prior
approval of the Federal Reserve before it may acquire all or substantially all
of the assets of any bank, or ownership or control of any voting shares of any
bank, if after such acquisition it would own or control, directly or
indirectly, more than 5% of the voting shares of such bank. In approving bank
acquisitions by bank holding companies, the Federal Reserve is required to
consider the financial and managerial resources and future prospects of the bank
holding company and the banks concerned, the convenience and needs of the
communities to be served, including the parties performance under the
Community Reinvestment Act (discussed below) and various competitive factors.
As described in greater detail below, pursuant to the Riegle-Neal Interstate
Banking and Branch Efficiency Act of 1994 (the Interstate Banking and
Branching Act), a bank holding company is permitted to acquire banks in states
other than its home state.

The
BHCA further prohibits a person or group of persons from acquiring control of
a bank holding company unless the Federal Reserve Bank has been notified and
has not objected to the transaction. Under a rebuttable presumption established
by the Federal Reserve, the acquisition of 10% or more of a class of voting
stock of a bank holding company with a class of securities registered under
Section 12 of the Exchange Act would, under the circumstances set forth in the
presumption, constitute acquisition of control of the bank holding company. In
addition, any person or group of persons must obtain the approval of the
Federal Reserve under the BHCA before acquiring 25% (5% in the case of an
acquirer that is already a bank holding company) or more of the outstanding
common stock of a bank holding company, or otherwise obtaining control or a
controlling influence over the bank holding company.

Interstate Banking and Branching.
The Interstate Banking and Branching Act
provides for nationwide interstate banking and branching. Under the law,
interstate acquisitions of banks or bank holding companies in any state by bank
holding companies in any other state are permissible subject to certain
limitations. Florida also has a law that allows out-of-state bank holding
companies (located in states that allow Florida bank holding companies to
acquire banks and bank holding companies in that state) to acquire Florida
banks and Florida bank holding companies. The law essentially provides for
out-of-state entry by acquisition only (and not by interstate branching) and
requires the acquired Florida bank to have been in existence for at least three
years. Interstate branching and consolidation of existing bank subsidiaries in
different states is permissible. A Florida bank also may establish, maintain,
and operate one or more branches in a state other than Florida pursuant to an
interstate merger transaction in which the Florida bank is the resulting bank.

Financial Modernization.The
Gramm-Leach-Bliley Act of 1999 (the GLB Act) sought to achieve significant
modernization of the federal bank regulatory framework by allowing the
consolidation of banking institutions with other types of financial services
firms, subject to various restrictions and requirements. In general, the GLB
Act repealed most of the federal statutory barriers which separated commercial
banking firms from insurance and securities firms and authorized the
consolidation of such firms in a financial services holding company. We have
no current plans to utilize the structural options created by the GLB Act.

Securities Regulation and Corporate
Governance.
OptimumBank Holdings common stock is registered with the Securities and
Exchange Commission (the SEC) under Section 12(g) of the Securities Exchange
Act of 1934, and we are subject to restrictions, reporting requirements and
review procedures under federal securities laws and regulations. We are also
subject to the rules and reporting requirements of the NASDAQ Global Market, on
which our common stock is traded. Like other issuers of publicly traded
securities, we must also comply with the corporate governance reforms enacted
under the Sarbanes-Oxley Act of 2002 (The Sarbanes-Oxley Act) and the rules
of the SEC and NASDAQ Stock Market adopted pursuant to the Sarbanes Oxley Act.
Among other things, these reforms, effective as of various dates, require
certification of financial statements by the chief executive officer and chief
financial officer, prohibit the provision of specified services by independent
auditors, require pre-approval of independent auditor services, define director
independence and require certain committees, and a majority of a subject
companys board of directors, to consist of independent directors, establish
additional disclosure requirements in reports filed with the SEC, require
expedited filing of reports, require management evaluation and auditor
attestation of internal controls, prohibit loans by the issuer (but not by
certain depository institutions) to directors and officers, set record-keeping
requirements, mandate complaint procedures for the reporting of accounting and
audit concerns by employees, and establish penalties for non-compliance.

Bank Regulation

General.
OptimumBank is chartered under the laws of the State of Florida, and its
deposits are insured by the FDIC to the extent provided by law. OptimumBank is
subject to comprehensive regulation, examination and supervision by the FDIC
and the Florida Department of Financial Services (the Florida Department) and
to other laws and regulations applicable to banks. Such regulations include
limitations on loans to a single borrower and to its directors, officers and
employees; limitations on the types of activities a state bank can conduct, restrictions
on the opening and closing of branch offices; the maintenance of required
capital ratios; the granting of credit under equal and fair conditions; and the
disclosure of the costs and terms of such credit. OptimumBank is examined
periodically by the FDIC and the Florida Department, to whom it submits
periodic reports regarding its financial condition and other matters. The FDIC
and the Florida Department have a broad range of powers to enforce regulations
under their jurisdiction, and to take discretionary actions determined to be
for the protection and safety and soundness of banks, including the institution
of cease and desist orders and the removal of directors and officers. The FDIC
and the Florida Department also have the authority to approve or disapprove
mergers, consolidations, and similar corporate actions.

5

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Dividends.OptimumBank
Holdings ability to pay dividends is substantially dependent on the ability of
OptimumBank to pay dividends to OptimumBank Holdings. The FDIC and the Florida
Department have the general authority to limit the dividend payment by banks if
such payment may be deemed to constitute an unsafe and unsound practice. For
information on the restrictions on the right of OptimumBank to pay dividends to
OptimumBank Holdings, see Part II  Item 5 Market for the Registrants Common
Equity and Related Stockholder Matters.

Loans to One Borrower.
Florida law generally allows a state bank such as OptimumBank to extend credit
to any one borrower (and certain related entities of such borrower) in an
amount up to 25% of its capital accounts, provided that the unsecured portion
may not exceed 15% of the capital accounts of the bank. Based upon
OptimumBanks capital, the maximum loan OptimumBank is currently permitted to
make is approximately $6.8 million, provided the unsecured portion does not
exceed approximately $4.1 million.

Transactions with Affiliates.
Under federal law, federally insured banks are subject, with certain
exceptions, to certain restrictions on any extension of credit to their parent
holding companies or other affiliates, on investment in the stock or other
securities of affiliates, and on the taking of such stock or securities as
collateral from any borrower. In addition, banks are prohibited from engaging
in certain tie-in arrangements in connection with any extension of credit or
the providing of any property or service.

Change of Bank Control.
Florida law restricts the amount of voting stock of a bank that a person may
acquire without the prior approval of banking regulators. The overall effect of
such laws is to make it more difficult to acquire a bank by tender offer or
similar means than it might be to acquire control of another type of
corporation. Consequently, shareholders of financial institutions are less
likely to benefit from the rapid increases in stock prices that often result
from tender offers or similar efforts to acquire control of other companies.

Under
Florida law, no person or group of persons may, directly or indirectly or
acting by or through one or more persons, purchase or acquire a controlling
interest in any bank which would result in the change in control of that bank
unless the Florida Department first shall have approved such proposed acquisition.
A person or group will be deemed to have acquired control of a bank (i) if
the person or group, directly or indirectly or acting by or through one, or
more other persons, owns, controls, or has power to vote 25% or more of any
class of voting securities of the bank, or controls in any manner the election
of a majority of the directors of the bank, or (ii) if the Florida Department
determines that such person exercises a controlling influence over the
management or policies of the bank. In any case where a proposed purchase of
voting securities would give rise to a presumption of control, the person or
group who proposes to purchase the securities must first file written notice of
the proposal to the Florida Department for its review and approval. Subsections
658.27(2)(c) and 658.28(3), Florida Statutes, refer to a potential change of
control of a financial institution at a 10% or more threshold and rebuttable
presumption of control. Accordingly, the name of any subscriber acquiring more
than 10% of the voting securities of OptimumBank must be submitted to the
Florida Department for prior approval.

USA Patriot Act.The USA Patriot Act was
enacted after
September 11, 2001 to provide the federal government with powers to prevent,
detect, and prosecute terrorism and international money laundering, and has
resulted in promulgation of several regulations that have a direct impact on
banks. There are a number of programs that financial institutions must have in
place such as: (i) Bank Secrecy Act/Anti-Money Laundering programs to manage
risk; (ii) Customer Identification Programs to determine the true identity of
customers, document and verify the information, and determine whether the
customer appears on any federal government list of known or suspected terrorist
or terrorist organizations; and (iii) monitoring for the timely detection and
reporting of suspicious activity and reportable transactions. Over the past few
years, enforcement, and compliance monitoring, of these anti-money laundering laws
has dramatically increased. As a result, we have increased the attention and
resources we dedicate to compliance with these laws.

Other Consumer Laws.
State usury laws and federal laws concerning interest rates limit the amount of
interest and various other charges collected or contracted by a bank.
OptimumBanks loans are also subject to federal laws applicable to consumer
credit transactions, such as the:

| |   |                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Federal
 Truth-In-Lending Act governing disclosures of credit terms to consumer
 borrowers;                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                          
| |  | Community
 Reinvestment Act requiring financial institutions to meet their obligations
 to provide for the total credit needs of the communities they serve,
 including investing their assets in loans to low and moderate-income
 borrowers;                           
| |   |                                                                                                                                                                                                                                                                          
| |  | Home
 Mortgage Disclosure Act requiring financial institutions to provide
 information to enable public officials to determine whether a financial
 institution is fulfilling its obligations to meet the housing needs of the
 community it serves;                     
| |   |                                                                                                                                                                                                                                                                          
| |  | Equal Credit
 Opportunity Act prohibiting discrimination on the basis of race, creed or
 other prohibitive factors in extending credit;                                                                                                                                  
| |   |                                                                                                                                                                                                                                                                          
| |  | Real Estate
 Settlement Procedures Act which requires lenders to disclose certain
 information regarding the nature and cost of real estate settlements, and
 prohibits certain lending practices, as well as limits escrow account amounts
 in real estate transactions;

6

---



| |   |                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Fair Debt
 Collection Act governing the manner in which consumer debts may be collected
 by collection agencies;                                                                                                                                                                                                                               
| |   |                                                                                                                                                                                                                                                                                                                                                
| |  | Fair and
 Accurate Credit Transactions Act which establishes additional rights for
 consumers to obtain and correct credit reports, addresses identity theft, and
 establishes additional requirements for consumer reporting agencies and financial
 institutions that provide adverse credit information to a consumer reporting
 agency; and
| |   |                                                                                                                                                                                                                                                                                                                                                
| |  | The rules
 and regulations of various federal agencies charged with the responsibility
 of implementing such federal laws.                                                                                                                                                                                                                     

OptimumBanks
deposit and loan operations are also subject to the:

| |   |                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The
 Gramm-Leach-Bliley Act of 1999 privacy provisions, which require us to
 maintain privacy policies intended to safeguard consumer financial
 information, to disclose these policies to our customers, and allow customers
 to opt-out of having their financial service providers disclose their
 confidential financial information to non-affiliated third parties, subject
 to certain exceptions;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Right to
 Financial Privacy Act, which imposes a duty to maintain confidentiality of
 consumer financial records and prescribes procedures for complying with
 administrative subpoenas of financial records; and                                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | Electronic
 Funds Transfer Act and Regulation E, which govern automatic deposits to, and
 withdrawals from, deposit accounts and customers rights and liabilities
 arising from the use of automated teller machines and other electronic
 banking services.                                                                                                                                               

Capital Adequacy Requirements

The
Federal Reserve Board and bank regulatory agencies require bank holding
companies and banks to maintain capital at adequate levels based on a
percentage of assets and off balance sheet exposures, adjusted for risk weights
ranging from 0% to 100%. Under the risk-based standard, capital is classified
into two tiers. Tier 1 capital consists of common and qualifying preferred
shareholders equity, excluding the unrealized gain (loss) on
available-for-sale securities, minus certain intangible assets. Tier 2 capital
consists of the general allowance for credit losses except for certain
limitations. An institutions qualifying capital base for purposes of its
risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital.
The regulatory minimum requirements are 4% for Tier 1 and 8% for total
risk-based capital. Banks are also required to maintain capital at a minimum
level based on total assets, which is known as the leverage ratio. The minimum
requirement for the leverage ratio is 3%, but all but the highest rated
institutions are required to maintain ratios 100 to 200 basis points above the
minimum. At December 31, 2007, OptimumBank Holdings and Bank met all capital
requirements to which they were subject.

The
FDIC Improvement Act of 1991 (FDICIA) contains prompt corrective action
provisions pursuant to which banks are to be classified into one of five
categories based upon capital adequacy, ranging from well capitalized to
critically undercapitalized and which require (subject to certain exceptions)
the appropriate federal banking agency to take prompt corrective action with
respect to an institution which becomes significantly undercapitalized or
critically undercapitalized. Under regulations implementing the prompt
corrective action provisions of FDICIA, the FDIC possesses broad powers to
take prompt corrective action as deemed appropriate for a bank, based on the
banks capital levels. The extent of these powers depends upon whether the bank
in question is considered well-capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, or critically undercapitalized. Generally,
as a bank is deemed to be less well-capitalized, the scope and severity of the
FDICs powers increase, ultimately permitting the FDIC to appoint a receiver for
the bank. Business activities may also be influenced by a banks capital
classification. For instance, only a well-capitalized bank may accept
brokered deposits without prior regulatory approval, and can engage in various
expansion activities with prior notice, rather than prior regulatory approval.
Failure to meet these capital requirements could subject the bank to the prompt
corrective action provisions of the FDIC, which may include filing with the
FDIC a plan describing the means and a schedule for achieving the minimum
capital requirements. In addition, a bank would not be able to receive
regulatory approval of any application that required consideration of capital
adequacy, such as a branch or merger application, unless it could demonstrate a
reasonable plan to meet the capital requirement within an acceptable period of
time. As of December 31, 2007, OptimumBank met the capital requirements of a
well capitalized institution.

For
additional information regarding OptimumBanks capital ratios and requirements,
see Managements Discussion and Analysis  Regulatory Capital Adequacy.

7

---



Community
Redevelopment Act

Bank
holding companies and their subsidiary banks are subject to the provisions of
the Community Reinvestment Act of 1977 (CRA) and the regulations promulgated
thereunder by the appropriate bank regulatory agency. Under the terms of the
CRA, the appropriate federal bank regulatory agency is required, in connection
with its examination of a bank, to assess such banks record in meeting the
credit needs of the community served by that bank, including low-and moderate-income
neighborhoods. The regulatory agencys assessment of the banks record is made
available to the public. Further, such assessment is required of any bank which
has applied to charter a bank, obtain deposit insurance coverage for a newly chartered
institution, establish a new branch office that will accept deposits, relocate
an office, or merge or consolidate with, or acquire the assets or assume the
liabilities of, a federally regulated financial institution. In the case of a
bank holding company applying for approval to acquire a bank or other bank
holding company, the Federal Reserve will assess the record of each subsidiary
bank of the applicant bank holding company, and such records may be the basis
for denying the application.

Effect of Governmental Monetary Policies

Our
earnings are affected by domestic economic conditions and the monetary and
fiscal policies of the United States government and its agencies. The Federal
Reserve monetary policies have had, and will likely continue to have, an
important impact on the operating results of financial institutions through its
power to implement national monetary policy in order, among other things, to
curb inflation or combat a recession. The monetary policies of the Federal
Reserve have major effects upon the levels of loans, investments and deposits
through its open market operations in United States Government securities and
through its regulation of the discount rate on borrowings of member banks and
the reserve requirement against member bank deposits. It is not possible to
predict the nature or impact of future changes in monetary and fiscal policies.

Statistical Profile and Other Financial Data

Reference
is hereby made to the statistical and financial data contained in the section
captioned Managements Discussion and Analysis of Financial Condition and
Results of Operations, for statistical and financial data providing a review
of our business activities.

|        |           
|------- | ----------
|Item 2. | Properties

The
following table sets forth information with respect to our main office and
branch offices as of December 31, 2007.

|                                 |  |                        |  |                 |            | 
|-------------------------------- |  | ---------------------- |  | --------------- | ---------- | 
|Location                         |  | Year Facility
  Opened |  | Facility Status |           
|                                 |  |                        |  |                 |            | 
|                                
|Executive
Office                 |  |                        |  |                 |            | 
|                                 |  |                        |  |                 |            | 
|2477 East
  Commercial Boulevard |  |                        |  |                 |            | 
|Fort Lauderdale,
  Florida 33308 |  | 2004                   |  |                 | Owned      | 
|                                 |  |                        |  |                 |            | 
|Branch
  Offices                 |  |                        |  |                 |            | 
|                                 |  |                        |  |                 |            | 
|10197 Cleary
  Boulevard         |  |                        |  |                 |            | 
|Plantation,
  Florida 33324      |  | 2000                   |  |                 | Owned      | 
|                                 |  |                        |  |                 |            | 
|3524 North
  Ocean Boulevard     |  |                        |  |                 |            | 
|Fort
  Lauderdale, Florida 33308 |  | 2003                   |  |                 | Leased (1) | 
|                                 |  |                        |  |                 |            | 
|2215 West
  Hillsboro Boulevard  |  |                        |  |                 |            | 
|Deerfield
  Beach, Florida 22442 |  | 2004                   |  |                 | Leased (2) | 

|    |                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(1) | On February
  1, 2007, OptimumBank entered into a sale/leaseback transaction for this
  facility. No gain or loss was recognized on this transaction. The lease is
  for a seven-year term. The monthly lease payment at December 31, 2007 was
  $4,444. The tenant is responsible for maintenance and real estate taxes.
|    |                                                                                                                                                                                                                                                                                                                          
|(2) | Lease is for
  a ten-year term, with two five-year options to renew, for 2,500 square feet.
  The monthly lease payment at December 31, 2007 was $6,183.33.                                                                                                                                                              

8

---



|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

From
time-to-time, we are involved in litigation arising in the ordinary course of
our business. As of the date of the filing of this Form 10-KSB, we are of the
opinion that the ultimate aggregate liability represented thereby, if any, will
not have a material adverse effect on our consolidated financial condition or
results of operations.

|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders

No
matters were submitted to a vote of our security holders during the fourth
quarter of the year ended December 31, 2007.

PART II

|        |                                                                            
|------- | ---------------------------------------------------------------------------
|Item 5. | Market for the Registrants Common Equity and Related Stockholder
  Matters

Our
common stock currently trades on the NASDAQ Global Market, under the symbol
OPHC. The table below presents the high and low sales prices for the periods
indicated.

|     |  |  |         |  |      |       |     |   |       |  | 
|---- |  |  | ------- |  | ---- | ----- | --- | - | ----- |  | 
|Year |  |  | Quarter |  | High |       | Low |   |      
|     |  |  |         |  |      |       |     |   |      
|    
|2006 |  |  | First   |  | $    | 11.05 |     | $ | 9.74  |  | 
|     |  |  | Second  |  | $    | 14.23 |     | $ | 10.71 |  | 
|     |  |  | Third   |  | $    | 13.05 |     | $ | 10.40 |  | 
|     |  |  | Fourth  |  | $    | 11.00 |     | $ | 10.35 |  | 
|     |  |  |         |  |      |       |     |   |       |  | 
|2007 |  |  | First   |  | $    | 13.00 |     | $ | 8.12  |  | 
|     |  |  | Second  |  | $    | 10.50 |     | $ | 8.50  |  | 
|     |  |  | Third   |  | $    | 10.16 |     | $ | 6.39  |  | 
|     |  |  | Fourth  |  | $    | 9.00  |     | $ | 6.51  |  | 

We had
approximately 594 holders registered or in street name as of December 31, 2007.

We
have not paid any cash dividends in the past. We intend that, for the
foreseeable future, we will retain earnings to finance continued growth rather
than pay cash dividends on our common stock.

As
a state chartered bank, OptimumBank is subject to dividend restrictions set by
Florida law and the FDIC. Except with the prior approval of the Florida
Department, all dividends of any Florida bank must be paid out of retained net
profits from the current period and the previous two years, after deducting
expenses, including losses and bad debts. In addition, a state-chartered bank
in Florida is required to transfer at least 20% of its net income to surplus
until its surplus equals the amount of paid-in capital. Under the Federal
Deposit Insurance Act, an FDIC-insured institution may not pay any dividend if
payment would cause it to become undercapitalized or while it is
undercapitalized.

9

---



|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 6. | Managements Discussion and Analysis of Financial Condition and
  Results of Operations.

SELECTED FINANCIAL DATA

At December 31, or for the Year Then Ended 
(Dollars in thousands, except per share figures)

|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|----------------------------------------------------------------------------------------------- |  | ---- | --------- | ---- |  | --------- | - | ---- | --------- | ---- |  | --------- | - |  | --------- | -
|                                                                                                |  | 2007 |           | 2006 |  | 2005      |   | 2004 |           | 2003 | 
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|At Year End:                                                                                    |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Cash and cash equivalents                                                                       |  | $    | 701       |      |  | 1,604     |   |      | 1,154     |      |  | 3,223     |   |  | 539       |  
|Securities held to maturity                                                                     |  |      | 58,471    |      |  | 33,399    |   |      | 25,618    |      |  | 24,134    |   |  | 16,539    |  
|Security available for sale                                                                     |  |      | 244       |      |  | 241       |   |      | 243       |      |  | 247       |   |  | 246       |  
|Loans, net                                                                                      |  |      | 173,323   |      |  | 181,878   |   |      | 170,226   |      |  | 128,810   |   |  | 111,320   |  
|Loans held for sale                                                                             |  |      |          |      |  |          |   |      |          |      |  | 509       |   |  | 1,406     |  
|All other assets                                                                                |  |      | 8,808     |      |  | 8,581     |   |      | 8,803     |      |  | 7,635     |   |  | 5,129     |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Total assets                                                                                    |  | $    | 241,547   |      |  | 225,703   |   |      | 206,044   |      |  | 164,558   |   |  | 135,179   |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Deposit accounts                                                                                |  |      | 125,034   |      |  | 129,502   |   |      | 114,064   |      |  | 97,994    |   |  | 80,744    |  
|Federal Home Loan Bank advances                                                                 |  |      | 56,850    |      |  | 56,550    |   |      | 52,950    |      |  | 37,650    |   |  | 29,500    |  
|Other borrowings                                                                                |  |      | 28,900    |      |  | 10,950    |   |      | 12,950    |      |  | 5,000     |   |  | 8,750     |  
|Junior subordinated debenture                                                                   |  |      | 5,155     |      |  | 5,155     |   |      | 5,155     |      |  | 5,155     |   |  |          |  
|All other liabilities                                                                           |  |      | 3,361     |      |  | 3,123     |   |      | 2,515     |      |  | 2,036     |   |  | 1,285     |  
|Stockholders equity                                                                            |  |      | 22,247    |      |  | 20,423    |   |      | 18,410    |      |  | 16,723    |   |  | 14,900    |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Total liabilities and stockholders
equity                                                      |  | $    | 241,547   |      |  | 225,703   |   |      | 206,044   |      |  | 164,558   |   |  | 135,179   |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|For the Year:                                                                                   |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Total interest income                                                                           |  |      | 16,137    |      |  | 14,191    |   |      | 11,334    |      |  | 8,815     |   |  | 6,516     |  
|Total interest expense                                                                          |  |      | 9,700     |      |  | 8,063     |   |      | 5,841     |      |  | 4,032     |   |  | 2,986     |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Net interest income                                                                             |  |      | 6,437     |      |  | 6,128     |   |      | 5,493     |      |  | 4,783     |   |  | 3,530     |  
|Provision for loan losses                                                                       |  |      | 476       |      |  | 265       |   |      | 149       |      |  | 136       |   |  | 204       |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Net interest income after provision for
  loan losses                                           |  |      | 5,961     |      |  | 5,863     |   |      | 5,344     |      |  | 4,647     |   |  | 3,326     |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Noninterest income                                                                              |  |      | 533       |      |  | 628       |   |      | 635       |      |  | 690       |   |  | 323       |  
|Noninterest expenses                                                                            |  |      | 3,749     |      |  | 3,574     |   |      | 3,396     |      |  | 2,801     |   |  | 2,075     |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Earnings before income taxes                                                                    |  |      | 2,745     |      |  | 2,917     |   |      | 2,583     |      |  | 2,536     |   |  | 1,574     |  
|Income taxes                                                                                    |  |      | 1,003     |      |  | 1,083     |   |      | 982       |      |  | 966       |   |  | 600       |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Net earnings                                                                                    |  | $    | 1,742     |      |  | 1,834     |   |      | 1,601     |      |  | 1,570     |   |  | 974       |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Net earnings per share, basic (1)                                                               |  | $    | .59       |      |  | .62       |   |      | .55       |      |  | .54       |   |  | .34       |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Net earnings per share, diluted (1)                                                             |  | $    | .57       |      |  | .60       |   |      | .53       |      |  | .52       |   |  | .33       |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Weighted-average number of shares
  outstanding, basic (1)                                      |  |      | 2,964,026 |      |  | 2,953,673 |   |      | 2,931,380 |      |  | 2,906,547 |   |  | 2,876,696 |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Weighted-average number of shares
  outstanding, diluted (1)                                    |  |      | 3,033,090 |      |  | 3,079,635 |   |      | 3,044,880 |      |  | 2,997,380 |   |  | 2,936,941 |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Ratios and Other Data:                                                                          |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|                                                                                                |  |      |           |      |  |           |   |      |           |      |  |           |   |  |           |  
|Return on average assets                                                                        |  |      | .73       | %    |  | .85       | % |      | .86       | %    |  | 1.06      | % |  | .95       | %
|Return on average equity                                                                        |  |      | 8.16      | %    |  | 9.37      | % |      | 9.09      | %    |  | 10.05     | % |  | 6.99      | %
|Average equity to average assets                                                                |  |      | 8.96      | %    |  | 9.12      | % |      | 9.42      | %    |  | 10.53     | % |  | 13.62     | %
|Net interest margin during the year                                                             |  |      | 2.78      | %    |  | 2.96      | % |      | 3.08      | %    |  | 3.35      | % |  | 3.56      | %
|Interest-rate differential during the year                                                      |  |      | 2.34      | %    |  | 2.63      | % |      | 2.84      | %    |  | 3.05      | % |  | 3.11      | %
|Net yield on average interest-earning
  assets                                                  |  |      | 6.96      | %    |  | 6.85      | % |      | 6.36      | %    |  | 6.18      | % |  | 6.56      | %
|Noninterest expenses to average assets                                                          |  |      | 1.57      | %    |  | 1.67      | % |      | 1.82      | %    |  | 1.89      | % |  | 2.03      | %
|Ratio of average interest-earning assets to
  average interest-bearing liabilities              |  |      | 1.10      |      |  | 1.08      |   |      | 1.08      |      |  | 1.11      |   |  | 1.15      |  
|Nonperforming loans and foreclosed real
  estate as a percentage of total assets at end of year |  |      | 0.01      | %    |  |          |   |      |          |      |  | 2.54      | % |  |          |  
|Allowance for loan losses as a percentage
  of total loans at end of year                       |  |      | .40       | %    |  | .54       | % |      | .46       | %    |  | .49       | % |  | .44       | %
|Total number of banking offices                                                                 |  |      | 3         |      |  | 3         |   |      | 3         |      |  | 3         |   |  | 3         |  
|Total shares outstanding at end of year (1)                                                     |  |      | 2,972,507 |      |  | 2,961,294 |   |      | 2,936,812 |      |  | 2,921,737 |   |  | 2,881,385 |  
|Book value per share at end of year (1)                                                         |  | $    | 7.48      |      |  | 6.90      |   |      | 6.27      |      |  | 5.72      |   |  | 5.17      |  

(1) All share
and per share amounts have been adjusted to reflect the 5% stock dividends
declared in May 2007 and April 2006.

10

---



MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

OptimumBank
Holdings, Inc. was formed in 2004 as a Florida corporation to serve as a
one-bank holding company for OptimumBank and acquired all of the shares of
OptimumBank in May 2004. Our only business is the ownership and operation of
OptimumBank. OptimumBank is a Florida chartered bank which opened in November
2000, and its deposits are insured by the FDIC. OptimumBank provides community
banking services to individuals and businesses in Broward, Miami-Dade and Palm
Beach counties. OptimumBank conducts operations from its Fort Lauderdale
headquarters and three branch offices in Fort Lauderdale, Plantation and
Deerfield Beach.

At
December 31, 2007, our company had total assets of $241.5 million, net loans of
$173.3 million, total deposits of $125.0 million and stockholders equity of
$22.2 million. During 2007, our company had net earnings of $1,742,000.

Critical Accounting Policies

Our
financial condition and results of operations are sensitive to accounting
measurements and estimates of matters that are inherently uncertain. When
applying accounting policies in areas that are subjective in nature, we must
use our best judgment to arrive at the carrying value of certain assets. One of
the most critical accounting policies applied by us is related to the valuation
of our loan portfolio.

A
variety of estimates impact the carrying value of our loan portfolio including
the calculation of the allowance for loan losses, valuation of underlying
collateral, the timing of loan charge-offs and the amount and amortization of
loan fees and deferred origination costs.

The
allowance for loan losses is one of our most difficult and subjective
judgments. The allowance is established and maintained at a level we believe is
adequate to cover losses resulting from the inability of borrowers to make
required payments on loans. Estimates for loan losses are determined by
analyzing risks associated with specific loans and the loan portfolio, current
trends in delinquencies and charge-offs, the views of our regulators, changes
in the size and composition of the loan portfolio and peer comparisons. The
analysis also requires consideration of the economic climate and direction,
changes in the interest rate environment which may impact a borrowers ability
to pay, legislation impacting the banking industry and economic conditions
specific to the tri-county region we serve in Southeast Florida. Because the
calculation of the allowance for loan losses relies on our estimates and
judgments relating to inherently uncertain events, results may differ from
managements estimates.

The
allowance for loan losses is also discussed as part of Results of Operations
and in Note 3 of Notes to the Consolidated Financial Statements. Our
significant accounting policies are discussed in Note 1 of Notes to the
Consolidated Financial Statements.

Regulation and Legislation

As
a state-chartered commercial bank, the Bank is subject to extensive regulation
by the Florida Department of Financial Services and the FDIC. We file reports
with the Florida Department and the FDIC concerning our activities and
financial condition, in addition to obtaining regulatory approvals prior to
entering into certain transactions such as mergers with or acquisitions of
other financial institutions. Periodic examinations are performed by the
Florida Department and the FDIC to monitor our compliance with the various
regulatory requirements. The Company is also subject to regulation and
examination by the Federal Reserve Board of Governors.

Loan Portfolio, Asset Quality and Credit Risk

Our
primary business is making real estate loans. This activity may subject us to
potential loan losses, the magnitude of which depends on a variety of economic
factors affecting borrowers which are beyond our control. We have instituted
detailed loan policies and procedures which include underwriting guidelines to
minimize loss exposure. We also have credit review procedures to protect us
from avoidable credit losses. We believe our procedures are adequate to insure
asset quality and protect against credit risk, but some losses beyond our
control will inevitably occur.

11

---



The following
table sets forth the composition of our loan portfolio:

|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|--------------------------------- |  | ---------------------- | ------- | ----------- |  | ------ | - | ----------- | ------- | ------ |  | ----------- | - | - | ------- | - |  | ------ | -
|                                  |  | At December 31,        |        
|                                  |  |                        |        
|                                  |  | 2007                   |         | 2006        |  | 2005   |  
|                                  |  |                        |         |             |  |        |  
|                                  |  | Amount                 |         | % of
 Total |  | Amount |   | % of
 Total |         | Amount |  | % of
 Total |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |  
|                                  |  | (dollars in thousands) |        
|Residential real estate           |  | $                      | 65,908  |             |  | 38.08  | % | $           | 70,868  |        |  | 38.99       | % | $ | 65,016  |   |  | 38.29  | %
|Multi-family real estate          |  |                        | 10,275  |             |  | 5.94   |   |             | 10,769  |        |  | 5.93        |   |   | 15,135  |   |  | 8.91   |  
|Commercial real estate            |  |                        | 75,777  |             |  | 43.78  |   |             | 68,852  |        |  | 37.89       |   |   | 54,286  |   |  | 31.97  |  
|Land and construction             |  |                        | 21,093  |             |  | 12.19  |   |             | 31,022  |        |  | 17.07       |   |   | 34,760  |   |  | 20.47  |  
|Commercial                        |  |                        |        |             |  |       |   |             |        |        |  |            |   |   | 570     |   |  | .33    |  
|Consumer                          |  |                        | 15      |             |  | .01    |   |             | 227     |        |  | .12         |   |   | 43      |   |  | .03    |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|Total loans                       |  |                        | 173,068 |             |  | 100.00 | % |             | 181,738 |        |  | 100.00      | % |   | 169,810 |   |  | 100.00 | %
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|Add (deduct):                     |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|Allowance for loan losses         |  |                        | (692    | )           |  |        |   |             | (974    | )      |  |             |   |   | (777    | ) |  |        |  
|Net deferred loan costs discounts |  |                        | 947     |             |  |        |   |             | 1,114   |        |  |             |   |   | 1,193   |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  
|Loans, net                        |  | $                      | 173,323 |             |  |        |   | $           | 181,878 |        |  |             |   | $ | 170,226 |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |        |  |             |   |   |         |   |  |        |  

|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|--------------------------------- |  | ---------------------- | ------- | ----------- |  | ------ | - | ----------- | ------- | - |  | ------ | -
|                                  |  | At December 31,        |        
|                                  |  |                        |        
|                                  |  | 2004                   |         | 2003        | 
|                                  |  |                        |         |             | 
|                                  |  | Amount                 |         | % of
 Total |  | Amount |   | % of
 Total |        
|                                  |  |                        |         |             |  |        |   |             |        
|                                  |  | (dollars in thousands) |        
|Residential real estate           |  | $                      | 61,070  |             |  | 47.38  | % | $           | 57,797  |   |  | 51.88  | %
|Multi-family real estate          |  |                        | 10,853  |             |  | 8.42   |   |             | 10,148  |   |  | 9.11   |  
|Commercial real estate            |  |                        | 38,064  |             |  | 29.53  |   |             | 26,129  |   |  | 23.45  |  
|Land and construction             |  |                        | 18,169  |             |  | 14.09  |   |             | 16,783  |   |  | 15.06  |  
|Commercial                        |  |                        | 581     |             |  | .45    |   |             | 490     |   |  | .44    |  
|Consumer                          |  |                        | 162     |             |  | .13    |   |             | 72      |   |  | .06    |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|Total loans                       |  |                        | 128,899 |             |  | 100.00 | % |             | 111,419 |   |  | 100.00 | %
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|Add (deduct):                     |  |                        |         |             |  |        |   |             |         |   |  |        |  
|Allowance for loan losses         |  |                        | (628    | )           |  |        |   |             | (492    | ) |  |        |  
|Net deferred loan costs discounts |  |                        | 539     |             |  |        |   |             | 393     |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  
|Loans, net                        |  | $                      | 128,810 |             |  |        |   | $           | 111,320 |   |  |        |  
|                                  |  |                        |         |             |  |        |   |             |         |   |  |        |  

12

---



The
following table sets forth the activity in the allowance for loan losses (in
thousands):

|                           |  |                         |      |      |   |      |   |      |     |      |   |     |  |   |     | 
|-------------------------- |  | ----------------------- | ---- | ---- | - | ---- | - | ---- | --- | ---- | - | --- |  | - | --- | 
|                           |  | Year Ended December 31, |     
|                           |  |                         |     
|                           |  | 2007                    |      | 2006 |   | 2005 |   | 2004 |     | 2003 |  
|                           |  |                         |      |      |   |      |   |      |     |      |  
|Beginning
 balance         |  | $                       | 974  |      | $ | 777  |   | $    | 628 |      | $ | 492 |  | $ | 288 | 
|Provision
 for loan losses |  |                         | 476  |      |   | 265  |   |      | 149 |      |   | 136 |  |   | 204 | 
|Loans
 charged off         |  |                         | (758 | )    |   | (68  | ) |      |    |      |   |    |  |   |    | 
|                           |  |                         |      |      |   |      |   |      |     |      |   |     |  |   |     | 
|                           |  |                         |      |      |   |      |   |      |     |      |   |     |  |   |     | 
|Ending
 balance            |  | $                       | 692  |      | $ | 974  |   | $    | 777 |      | $ | 628 |  | $ | 492 | 
|                           |  |                         |      |      |   |      |   |      |     |      |   |     |  |   |     | 

The
allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to earnings. Loan losses
are charged against the allowance when we believe the uncollectibility of a
loan balance is confirmed. Subsequent recoveries, if any, are credited to the
allowance. In 2007 and 2006, the charge-offs related to a single-family residential
loan. The allowance for loan losses represented .40% and .54% of the total
loans outstanding at December 31, 2007 and 2006, respectively.

We
evaluate the allowance for loan losses on a regular basis. It is based on our
periodic review of the collectibility of the existing loan portfolio in light
of historical experience, the nature and volume of the loan portfolio, adverse
situations that may affect the borrowers ability to repay, estimated value of
any underlying collateral and prevailing economic conditions. This evaluation
is inherently subjective as it requires estimates that are susceptible to
significant revision as more information becomes available.

The
allowance consists of specific and general components. The specific component
relates to loans that are classified as impaired. For such loans, we establish
an allowance when the discounted cash flows (or collateral value or observable
market price) of the impaired loan is lower than the carrying value of that
loan. The general component covers all other loans and is based on historical
loss experience adjusted for qualitative factors.

We
consider a loan impaired when, based on current information and events, it is
probable that we will be unable to collect the scheduled payments of principal
or interest when due according to the contractual terms of the loan agreement.
Factors we consider in determining impairment include payment status,
collateral value, and the probability of collecting scheduled principal and
interest payments when due. Loans that experience insignificant payment delays
and payment shortfalls generally are not classified as impaired. We determine
the significance of payment delays and payment shortfalls on a case-by-case
basis, taking into consideration all of the circumstances surrounding the loan
and the borrower, including the length of the delay, the reasons for the delay,
the borrowers prior payment record, and the amount of the shortfall in
relation to the principal and interest owed. We measure impairment on a loan by
loan basis for commercial real estate, land and construction and multi-family
real estate loans by either the present value of expected future cash flows
discounted at the loans effective interest rate, the loans obtainable market
price, or the fair value of the collateral if the loan is collateral dependent.

We
collectively evaluate large groups of smaller balance homogeneous loans for
impairment. Accordingly, we do not separately identify individual consumer and
residential loans for impairment disclosures.

13

---



The
following table sets forth our allowance for loan losses by loan type (dollars
in thousands):

Allowance for Loan Losses

|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|---------------------------------------------------------------------- |  | --------------- | ---- | -------------------- | ------ | ------ | --------------- | -------------------- | ------------------- | ------ | ------ | -------------------- | -------------------- | - | ------ | -
|                                                                       |  | At December 31, |     
|                                                                       |  |                 |     
|                                                                       |  | 2007            |      | 2006                 |        | 2005   |                
|                                                                       |  |                 |      |                      |        |        |                
|                                                                       |  | Amount          |      | % of
  Total
  Loans |        | Amount |                 | % of
  Total
  Loans |                     | Amount |        | % of
  Total
  Loans |                     
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                     
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|Residential real estate                                                |  | $               | 187  |                      | 38.08  | %      | $               | 400                  |                     | 38.99  | %      | $                    | 206                  |   | 38.29  | %
|Multi-family real estate                                               |  |                 | 59   |                      | 5.94   |        |                 | 54                   |                     | 5.93   |        |                      | 81                   |   | 8.91   |  
|Commercial real estate                                                 |  |                 | 379  |                      | 43.78  |        |                 | 406                  |                     | 37.89  |        |                      | 347                  |   | 31.97  |  
|Land and construction                                                  |  |                 | 67   |                      | 12.19  |        |                 | 114                  |                     | 17.07  |        |                      | 140                  |   | 20.47  |  
|Commercial                                                             |  |                 |     |                      |       |        |                 |                     |                     |       |        |                      | 3                    |   | .33    |  
|Consumer                                                               |  |                 |     |                      | .01    |        |                 |                     |                     | .12    |        |                      |                     |   | .03    |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|Total allowance for loan losses                                        |  | $               | 692  |                      | 100.00 | %      | $               | 974                  |                     | 100.00 | %      | $                    | 777                  |   | 100.00 | %
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|Allowance for loan losses as a percentage
  of total loans outstanding |  |                 | 0.40 | %                    |        |        |                 | 0.54                 | %                   |        |        |                      | 0.46                 | % |        |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                      
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                       |  |                 |      |                      |        |        | At December 31, |                     
|                                                                       |  |                 |      |                      |        |        |                 |                     
|                                                                       |  |                 |      |                      |        |        | 2004            |                      | 2003                |       
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |       
|                                                                       |  |                 |      |                      |        |        | Amount          |                      | %of
  Total
  Loans |        | Amount |                      | % of
  Total
  Loans |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|Residential real estate                                                |  |                 |      |                      |        |        | $               | 218                  |                     | 47.38  | %      | $                    | 202                  |   | 51.88  | %
|Multi-family real estate                                               |  |                 |      |                      |        |        |                 | 52                   |                     | 8.42   |        |                      | 137                  |   | 9.11   |  
|Commercial real estate                                                 |  |                 |      |                      |        |        |                 | 240                  |                     | 29.53  |        |                      | 60                   |   | 23.45  |  
|Land and construction                                                  |  |                 |      |                      |        |        |                 | 115                  |                     | 14.09  |        |                      | 93                   |   | 15.06  |  
|Commercial                                                             |  |                 |      |                      |        |        |                 | 3                    |                     | .45    |        |                      |                     |   | .44    |  
|Consumer                                                               |  |                 |      |                      |        |        |                 |                     |                     | .13    |        |                      |                     |   | .06    |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|Total allowance for loan losses                                        |  |                 |      |                      |        |        | $               | 628                  |                     | 100.00 | %      | $                    | 492                  |   | 100.00 | %
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  
|                                                                      
|Allowance for loan losses as a percentage
  of total loans outstanding |  |                 |      |                      |        |        |                 | 0.49                 | %                   |        |        |                      | 0.44                 | % |        |  
|                                                                       |  |                 |      |                      |        |        |                 |                      |                     |        |        |                      |                      |   |        |  

14

---



There
were no impaired loans during 2006 or at December 31, 2005 or 2007. During 2007
and 2005, the average net investment in impaired loans and interest income
recognized and received on impaired loans is as follows (in thousands):

|                                                             |  |                         |       |      |   |     | 
|------------------------------------------------------------ |  | ----------------------- | ----- | ---- | - | --- | 
|                                                             |  | Year Ended December 31, |      
|                                                             |  |                         |      
|                                                             |  | 2007                    |       | 2005 |  
|                                                             |  |                         |       |      |  
|                                                             |  |                         |       |      |   |     | 
|Average
  investment in impaired loans                       |  | $                       | 1,581 |      | $ | 844 | 
|                                                             |  |                         |       |      |   |     | 
|                                                             |  |                         |       |      |   |     | 
|Interest
  income recognized on impaired loans               |  | $                       | 39    |      | $ |    | 
|                                                             |  |                         |       |      |   |     | 
|                                                             |  |                         |       |      |   |     | 
|Interest
  income received on a cash basis on impaired loans |  | $                       | 39    |      | $ |    | 
|                                                             |  |                         |       |      |   |     | 

At
December 31, 2006, 2005 and 2003, the Company had no nonaccrual loans or loans
over 90 days past due still accruing interest. Nonaccrual and past due loans
were as follows as of December 31, 2007 and 2004 (in thousands):

|                                                        |  |                 |     |      |   |       | 
|------------------------------------------------------- |  | --------------- | --- | ---- | - | ----- | 
|                                                        |  | At December 31, |    
|                                                        |  |                 |    
|                                                        |  | 2007            |     | 2004 |  
|                                                        |  |                 |     |      |  
|                                                        |  |                 |     |      |   |       | 
|Nonaccrual
  loans                                      |  | $               | 245 |      | $ | 3,268 | 
|                                                        |  |                 |     |      |   |       | 
|                                                        |  |                 |     |      |   |       | 
|Past ninety
  days or more, but still accruing interest |  | $               |    |      | $ |      | 
|                                                        |  |                 |     |      |   |       | 
|                                                        |  |                 |     |      |   |       | 
|                                                        |  |                 |     |      |   |       | 

15

---



Liquidity and Capital Resources

Liquidity
represents an institutions ability to meet current and future obligations
through liquidation or maturity of existing assets or the acquisition of
additional liabilities. Our ability to respond to the needs of depositors and
borrowers and to benefit from investment opportunities is facilitated through
liquidity management.

Our
primary sources of cash during the year ended December 31, 2007 were from other
borrowings of $18.0 million, principal repayments and calls of securities held
to maturity of $9.2 million and net repayments of loans of $7.6 million. Cash
was used primarily to purchase securities held to maturity totaling $34.2
million and to fund deposit withdrawals of $4.5 million. In order to increase
our core deposits, we have priced our deposit rates competitively. We will adjust
rates on our deposits to attract or retain deposits as needed. In addition to
obtaining funds from depositors in our market area, from time to time we have
utilized brokers to obtain deposits outside our market area.

In
addition to obtaining funds from depositors, we may borrow funds from other
financial institutions. We are a member of the Federal Home Loan Bank of
Atlanta, which allows us to borrow funds under a pre-arranged line of credit
equal to 40% of the Banks total assets. As of December 31, 2007, we had $56.9
million in borrowings outstanding from the Federal Home Loan Bank of Atlanta to
facilitate loan fundings and manage our asset and liability structure. In
addition, we have an unsecured federal funds line of credit with Independent
Bankers Bank of Florida totaling $6.0 million, none of which was outstanding at
December 31, 2007. This credit line is normally used to meet short-term funding
demands. At December 31, 2007, we sold securities under an agreement to
repurchase totaling $28.9 million. These borrowings are collateralized by
securities held to maturity with a carrying value of $33.7 million at December
31, 2007. We believe our liquidity sources are adequate to meet our operating
needs.

Securities

Our
securities portfolio is comprised primarily of mortgage-backed securities and a
mutual fund. The securities portfolio is categorized as either held to
maturity or available for sale. Securities held to maturity represent those
securities which we have the positive intent and ability to hold to maturity.
These securities are carried at amortized cost. Securities available for sale
represent those investments which may be sold for various reasons including
changes in interest rates and liquidity considerations. These securities are
reported at fair market value and unrealized gains and losses are excluded from
earnings and reported in other comprehensive income.

The
following table sets forth the amortized cost and fair value of our securities
portfolio (in thousands):

|                                                         |  |                  |        |              |   |        | 
|-------------------------------------------------------- |  | ---------------- | ------ | ------------ | - | ------ | 
|                                                         |  | Amortized
  Cost |        | Fair
  Value |  
|                                                         |  |                  |        |              |  
|At December 31,
  2007:                                  |  |                  |        |              |   |        | 
|Securities held to maturity:                             |  |                  |        |              |   |        | 
|Mortgage-backed securities                               |  | $                | 58,371 |              | $ | 58,017 | 
|Foreign bond                                             |  |                  | 100    |              |   | 100    | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  | $                | 58,471 |              | $ | 58,117 | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|Securities available for sale-Mutual fund                |  | $                | 250    |              | $ | 244    | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|At December 31,
  2006:                                  |  |                  |        |              |   |        | 
|Securities held to maturity:                             |  |                  |        |              |   |        | 
|Mortgage-backed securities                               |  | $                | 33,299 |              | $ | 33,050 | 
|Foreign bond                                             |  |                  | 100    |              |   | 100    | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  | $                | 33,399 |              | $ | 33,150 | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|Securities available for sale-Mutual fund                |  | $                | 250    |              | $ | 241    | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|At December 31,
  2005:                                  |  |                  |        |              |   |        | 
|Securities held to maturity-Mortgage-backed
  securities |  | $                | 25,618 |              | $ | 25,096 | 
|                                                         |  |                  |        |              |   |        | 
|                                                         |  |                  |        |              |   |        | 
|Securities available for sale-Mutual fund                |  | $                | 250    |              | $ | 243    | 
|                                                         |  |                  |        |              |   |        | 

16

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The
following table sets forth, by maturity distribution, certain information
pertaining to the securities portfolio (dollars in thousands):

|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|-------------------------- |  | ----------------- | - | ------------------------------------- |  | ---------------------------------------- |  | ----------------- | - | ----- |  | ----- | - | --- |  |  | - | ------ |  | - | ------ |  | ---- | -
|                           |  | Within
  One Year |   | After One
  But Within
  Five
  Years |  | After Five
  Years
  Through
  Ten Years |  | After Ten
  Years |   | Total |  | Yield |  
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |  
|                          
|At December 31,
  2007:    |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |       
|Mortgage-backed securities |  |                   | $ |                                      |  |                                          |  | $                 |  |       |  |       | $ |    |  |  | $ | 58,371 |  | $ | 58,371 |  | 5.59 | %
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|                          
|Foreign bond               |  |                   | $ |                                      |  |                                          |  | $                 |  |       |  |       | $ | 100 |  |  | $ |       |  | $ | 100    |  | 5.95 | %
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|At December 31,
  2006:    |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|Mortgage-backed securities |  |                   | $ |                                      |  |                                          |  | $                 |  |       |  |       | $ |    |  |  | $ | 33,299 |  | $ | 33,299 |  | 5.01 | %
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|                          
|Foreign bond               |  |                   | $ |                                      |  |                                          |  | $                 |  |       |  |       | $ | 100 |  |  | $ |       |  | $ | 100    |  | 5.95 | %
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|At December 31,
  2005:    |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  
|Mortgage-backed securities |  |                   | $ |                                      |  |                                          |  | $                 |  |       |  |       | $ |    |  |  | $ | 25,618 |  | $ | 25,618 |  | 4.49 | %
|                           |  |                   |   |                                       |  |                                          |  |                   |   |       |  |       |   |     |  |  |   |        |  |   |        |  |      |  

Regulatory Capital Adequacy

The
Bank is subject to various regulatory capital requirements administered by the
Federal and state banking agencies. As of December 31, 2007, the most recent
notification from the regulatory authorities categorized our Bank as well
capitalized under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, an institution must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage percentages as set forth in
the following tables. There are no conditions or events since that notification
that management believes have changed our category.

The
following table sets forth for the Bank the amount and the percentage of our
actual regulatory capital, regulatory capital for capital adequacy purposes,
and the minimum regulatory capital to be well capitalized under the prompt
corrective action provisions of the Federal regulations (dollars in thousands).

REGULATORY CAPITAL REQUIREMENTS

|                                       |  |        |        |                                 |       |                                                                                  |   |        |  |        |   |   |        |  |       |  
|-------------------------------------- |  | ------ | ------ | ------------------------------- | ----- | -------------------------------------------------------------------------------- | - | ------ |  | ------ | - | - | ------ |  | ----- | -
|                                       |  | Actual |        | For Capital Adequacy
  Purposes |       | Minimum
  To Be Well
  Capitalized Under
  Prompt Corrective
  Action Provisions |  
|                                       |  |        |        |                                 |       |                                                                                  |  
|                                       |  | Amount |        | %                               |       | Amount                                                                           |   | %      |  | Amount |   | % |       
|                                       |  |        |        |                                 |       |                                                                                  |   |        |  |        |   |   |       
|                                      
|As of December 31,
  2007:             |  |        |        |                                 |       |                                                                                  |   |        |  |        |   |   |        |  |       |  
|Total Capital to Risk-Weighted Assets  |  | $      | 27,966 |                                 | 17.95 | %                                                                                | $ | 12,465 |  | 8.00   | % | $ | 15,581 |  | 10.00 | %
|Tier I Capital to Risk-Weighted Assets |  |        | 27,274 |                                 | 17.50 |                                                                                  |   | 6,232  |  | 4.00   |   |   | 9,349  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 27,274 |                                 | 11.15 |                                                                                  |   | 9,787  |  | 4.00   |   |   | 12,234 |  | 5.00  |  
|                                       |  |        |        |                                 |       |                                                                                  |   |        |  |        |   |   |        |  |       |  
|As of December 31,
  2006:             |  |        |        |                                 |       |                                                                                  |   |        |  |        |   |   |        |  |       |  
|Total Capital to Risk-Weighted Assets  |  |        | 26,334 |                                 | 16.72 |                                                                                  |   | 12,599 |  | 8.00   |   |   | 15,749 |  | 10.00 |  
|Tier I Capital to Risk-Weighted Assets |  |        | 25,360 |                                 | 16.10 |                                                                                  |   | 6,299  |  | 4.00   |   |   | 9,449  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 25,360 |                                 | 11.24 |                                                                                  |   | 9,026  |  | 4.00   |   |   | 11,282 |  | 5.00  |  

17

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|                                       |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|-------------------------------------- |  | ------ | ------ | ------------------------------ |  | ---------------------------------------------------------------------------- | - | - | ------ | ------ |  | ---- | - | - | ------ |  |  | ----- | -
|                                       |  | Actual |        | For Capital Adequacy
 Purposes |  | Minimum
 To Be Well
 Capitalized Under
 Prompt Corrective
 Action Provisions |  
|                                       |  |        |        |                                |  |                                                                              |  
|                                       |  | Amount |        | %                              |  | Amount                                                                       |   | % |        | Amount |  | %    |  
|                                       |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |  
|As of December 31, 2005:               |  |        |        |                                |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|Total capital to Risk-Weighted assets  |  | $      | 23,891 |                                |  | 16.27                                                                        | % | $ | 11,746 |        |  | 8.00 | % | $ | 14,684 |  |  | 10.00 | %
|Tier I Capital to Risk-Weighted Assets |  |        | 23,114 |                                |  | 15.74                                                                        |   |   | 5,874  |        |  | 4.00 |   |   | 8,811  |  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 23,114 |                                |  | 11.50                                                                        |   |   | 8,040  |        |  | 4.00 |   |   | 10,050 |  |  | 5.00  |  

Market Risk

Market
risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from
interest-rate risk inherent in our lending and deposit-taking activities. We do not engage in securities trading or
hedging activities and do not invest in interest-rate derivatives or enter into
interest rate swaps.

We
may utilize financial instruments with off-balance-sheet risk in the normal
course of business to meet the financing needs of our customers. The measurement of market risk associated
with financial instruments is meaningful only when all related and offsetting
on- and off-balance-sheet transactions are aggregated, and the resulting net
positions are identified. Disclosures
about the fair value of financial instruments, which reflect changes in market
prices and rates, can be found in Note 8 of Notes to Consolidated Financial
Statements.

Our
primary objective in managing interest-rate risk is to minimize the potential
adverse impact of changes in interest rates on our net interest income and
capital, while adjusting our asset-liability structure to obtain the maximum
yield-cost spread on that structure. We
actively monitor and manage our interest-rate risk exposure by managing our
asset and liability structure. However,
a sudden and substantial increase in interest rates may adversely impact our
earnings, to the extent that the interest-earning assets and interest-bearing
liabilities do not change or reprice at the same speed, to the same extent, or
on the same basis.

We
use modeling techniques to simulate changes in net interest income under
various rate scenarios. Important
elements of these techniques include the mix of floating versus fixed-rate
assets and liabilities, and the scheduled, as well as expected, repricing and
maturing volumes and rates of the existing balance sheet.

18

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Asset Liability Management

As
part of our asset and liability management, we have emphasized establishing and
implementing internal asset-liability decision processes, as well as control
procedures to aid in managing our earnings.
Management believes that these processes and procedures provide us with
better capital planning, asset mix and volume controls, loan-pricing
guidelines, and deposit interest-rate guidelines, which should result in
tighter controls and less exposure to interest-rate risk.

The
matching of assets and liabilities may be analyzed by examining the extent to
which such assets and liabilities are interest rate sensitive and by
monitoring an institutions interest rate sensitivity gap. An asset or liability is said to be interest
rate sensitive within a specific time period if it will mature or reprice
within that time period. The interest-rate
sensitivity gap is defined as the difference between interest-earning assets
and interest-bearing liabilities maturing or repricing within a given time
period. The gap ratio is computed as
the amount of rate sensitive assets less the amount of rate sensitive
liabilities divided by total assets. A
gap is considered positive when the amount of interest-rate sensitive assets
exceeds interest-rate sensitive liabilities.
A gap is considered negative when the amount of interest-rate sensitive
liabilities exceeds interest-rate sensitive assets. During a period of rising interest rates, a negative gap would
adversely affect net interest income, while a positive gap would result in an
increase in net interest income. During
a period of falling interest rates, a negative gap would result in an increase
in net interest income, while a positive gap would adversely affect net
interest income.

In
order to minimize the potential for adverse effects of material and prolonged
increases in interest rates on the results of operations, our management
continues to monitor our assets and liabilities to better match the maturities
and repricing terms of our interest-earning assets and interest-bearing
liabilities. Our policies emphasize the
origination of adjustable-rate loans, building a stable core deposit base and,
to the extent possible, matching deposit maturities with loan repricing
timeframes or maturities.

19

---



The
following table sets forth certain information relating to our interest-earning
assets and interest-bearing liabilities at December 31, 2007, that are
estimated to mature or are scheduled to reprice within the period shown
(dollars in thousands):

GAP MATURITY / REPRICING SCHEDULE

|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|---------------------------------- |  | ------------------ | ------- | ----------------------------------------------- | - | ---------------------------------------------------- | -- | -------------------- | ------- | ----- | - | ------ | - | - | ------- | 
|                                   |  | One
 Year or
 Less |         | More
 than One
 Year and
 Less than
 Five Years |   | More
 than Five
 Years and
 Less than
 Fifteen Years |    | Over
 Fifteen
 Years |         | Total |  
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |  
|Loans (1):                         |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Residential real estate loans      |  | $                  | 26,996  |                                                 | $ | 34,166                                               |    | $                    | 4,746   |       | $ |       |   | $ | 65,908  | 
|Multi-family real estate loans     |  |                    | 5,173   |                                                 |   | 5,102                                                |    |                      |        |       |   |       |   |   | 10,275  | 
|Commercial real estate loans       |  |                    | 27,759  |                                                 |   | 47,818                                               |    |                      | 200     |       |   |       |   |   | 75,777  | 
|Land and construction              |  |                    | 9,004   |                                                 |   | 12,089                                               |    |                      |        |       |   |       |   |   | 21,093  | 
|Consumer loans                     |  |                    | 15      |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 15      | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Total loans                        |  |                    | 68,947  |                                                 |   | 99,175                                               |    |                      | 4,946   |       |   |       |   |   | 173,068 | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Federal funds sold                 |  |                    | 226     |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 226     | 
|Securities (2)                     |  |                    | 1,473   |                                                 |   | 3,693                                                |    |                      | 11,202  |       |   | 42,347 |   |   | 58,715  | 
|Federal Home Loan Bank stock       |  |                    | 2,965   |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 2,965   | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Total rate-sensitive assets        |  |                    | 73,611  |                                                 |   | 102,868                                              |    |                      | 16,148  |       |   | 42,347 |   |   | 234,974 | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Deposit accounts (3):              |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Money-market deposits              |  |                    | 26,760  |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 26,760  | 
|Interest-bearing checking deposits |  |                    | 967     |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 967     | 
|Savings deposits                   |  |                    | 475     |                                                 |   |                                                     |    |                      |        |       |   |       |   |   | 475     | 
|Time deposits                      |  |                    | 78,100  |                                                 |   | 17,428                                               |    |                      |        |       |   |       |   |   | 95,528  | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Total deposits                     |  |                    | 106,302 |                                                 |   | 17,428                                               |    |                      |        |       |   |       |   |   | 123,730 | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Federal Home Loan Bank advances    |  |                    | 13,650  |                                                 |   | 43,200                                               |    |                      |        |       |   |       |   |   | 56,850  | 
|Other borrowings                   |  |                    |        |                                                 |   | 28,900                                               |    |                      |        |       |   |       |   |   | 28,900  | 
|Junior subordinated debenture      |  |                    |        |                                                 |   | 5,155                                                |    |                      |        |       |   |       |   |   | 5,155   | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Total rate-sensitive liabilities   |  |                    | 119,952 |                                                 |   | 94,683                                               |    |                      |        |       |   |       |   |   | 214,635 | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|GAP (repricing differences)        |  | $                  | (46,341 | )                                               | $ | 8,185                                                |    | $                    | 16,148  |       | $ | 42,347 |   | $ | 20,339  | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Cumulative GAP                     |  | $                  | (46,341 | )                                               | $ | (38,156                                              | )  | $                    | (22,008 | )     | $ | 20,339 |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 
|Cumulative GAP/total assets        |  |                    | (19.19  | )%                                              | $ | (15.80                                               | )% | $                    | (9.11   | )%    | $ | 8.42   | % |   |         | 
|                                   |  |                    |         |                                                 |   |                                                      |    |                      |         |       |   |        |   |   |         | 

|    |                                                                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | In preparing the table
 above, adjustable-rate loans are included in the period in which the interest
 rates are next scheduled to adjust rather than in the period in which the
 loans mature. Fixed-rate loans are
 scheduled, including repayment, according to their maturities.
|    |                                                                                                                                                                                                                                                                                     
|(2) | Securities are scheduled
 through the repricing date.                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                     
|(3) | Money-market,
 interest-bearing checking and savings deposits are regarded as readily
 accessible withdrawable accounts. All
 other time deposits are scheduled through the maturity dates.                                                                                         

20

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The
following table sets forth loan maturities by type of loan at December 31, 2007
(in thousands):

|                           |  |                    |       |                                     |   |                    |  |       |         |  |   |         | 
|-------------------------- |  | ------------------ | ----- | ----------------------------------- | - | ------------------ |  | ----- | ------- |  | - | ------- | 
|                           |  | One Year
  or Less |       | After One
  But Within
  Five Years |   | After
  Five Years |  | Total |        
|                           |  |                    |       |                                     |   |                    |  |       |        
|                          
|Residential real estate    |  | $                  | 1,401 |                                     | $ | 10,917             |  | $     | 53,590  |  | $ | 65,908  | 
|Multi-family
  real estate |  |                    |      |                                     |   |                   |  |       | 10,275  |  |   | 10,275  | 
|Commercial
  real estate   |  |                    | 1,720 |                                     |   | 593                |  |       | 73,464  |  |   | 75,777  | 
|Land and
  construction    |  |                    | 3,507 |                                     |   | 6,044              |  |       | 11,542  |  |   | 21,093  | 
|Consumer                   |  |                    | 15    |                                     |   |                   |  |       |        |  |   | 15      | 
|                           |  |                    |       |                                     |   |                    |  |       |         |  |   |         | 
|                          
|Total                      |  | $                  | 6,643 |                                     | $ | 17,554             |  | $     | 148,871 |  | $ | 173,068 | 
|                           |  |                    |       |                                     |   |                    |  |       |         |  |   |         | 

The
following table sets forth the maturity or repricing of loans by interest type
at December 31, 2007 (in thousands):

|                         |  |                    |        |                                     |   |                    |  |       |       |  |   |         | 
|------------------------ |  | ------------------ | ------ | ----------------------------------- | - | ------------------ |  | ----- | ----- |  | - | ------- | 
|                         |  | One Year
  or Less |        | After One
  But Within
  Five Years |   | After
  Five Years |  | Total |      
|                         |  |                    |        |                                     |   |                    |  |       |      
|                        
|Fixed
  interest rate    |  | $                  | 5,836  |                                     | $ | 8,627              |  | $     | 4,946 |  | $ | 19,409  | 
|Variable
  interest rate |  |                    | 63,110 |                                     |   | 90,549             |  |       |      |  |   | 153,659 | 
|                         |  |                    |        |                                     |   |                    |  |       |       |  |   |         | 
|                        
|Total                    |  | $                  | 68,946 |                                     | $ | 99,176             |  | $     | 4,946 |  | $ | 173,068 | 
|                         |  |                    |        |                                     |   |                    |  |       |       |  |   |         | 

Scheduled
contractual principal repayments of loans do not reflect the actual life of
such assets. The average life of loans is substantially less than their average
contractual terms due to prepayments. In addition, due-on-sale clauses on loans
generally give us the right to declare a conventional loan immediately due and
payable in the event, among other things, that the borrower sells real property
subject to a mortgage and the loan is not repaid. The average life of mortgage
loans tends to increase, however, when current mortgage loan rates are
substantially higher than rates on existing mortgage loans and, conversely,
decrease when rates on existing mortgages are substantially higher than current
mortgage rates.

Off-Balance Sheet Arrangements and Aggregate
Contractual Obligations

We
are 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 include commitments to extend credit. At December 31,
2007, we had outstanding commitments to originate real estate loans totaling
$6.7 million and undisbursed loans in process totaling $250,000. These
instruments involve, to varying degrees, elements of credit and interest-rate
risk in excess of the amounts recognized in the consolidated balance sheet. The
contractual amounts of those instruments reflect the extent of the Companys
involvement in particular classes of financial instruments.

Our
exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend credit is represented by the
contractual amount of those instruments. We use the same credit policies in
making commitments as we do 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. Since certain commitments expire without being drawn upon,
the total committed amounts do not necessarily represent future cash
requirements. We evaluate each customers credit worthiness on a case-by-case
basis. The amount of collateral obtained, if we deem it necessary in order to
extend credit, is based on managements credit evaluation of the counterparty.

21

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The
following is a summary of the Banks contractual obligations, including certain
on-balance sheet obligations, at December 31, 2007 (in thousands):

|                                  |  |                        |        |                      |   |             |  |             |        |                       |   |        |  |   |        | 
|--------------------------------- |  | ---------------------- | ------ | -------------------- | - | ----------- |  | ----------- | ------ | --------------------- | - | ------ |  | - | ------ | 
|                                  |  | Payments Due by Period |       
|                                  |  |                        |       
|Contractual
  Obligations         |  | Total                  |        | Less
  Than 1
  Year |   | 1-3
  Years |  | 3-5
  Years |        | More
  Than 5
  Years |  
|                                  |  |                        |        |                      |   |             |  |             |        |                       |  
|                                 
|Federal Home
  Loan Bank advances |  | $                      | 56,850 |                      | $ | 700         |  | $           | 11,000 |                       | $ | 4,000  |  | $ | 41,150 | 
|Junior
  subordinated debenture   |  |                        | 5,155  |                      |   |            |  |             | 5,155  |                       |   |       |  |   |       | 
|Other
  borrowings                |  |                        | 28,900 |                      |   |            |  |             |       |                       |   | 28,900 |  |   |       | 
|Operating
  leases                |  |                        | 671    |                      |   | 130         |  |             | 390    |                       |   | 151    |  |   |       | 
|Loan
  commitments                |  |                        | 6,665  |                      |   | 6,665       |  |             |       |                       |   |       |  |   |       | 
|Undisbursed
  loans in process    |  |                        | 250    |                      |   | 250         |  |             |       |                       |   |       |  |   |       | 
|                                  |  |                        |        |                      |   |             |  |             |        |                       |   |        |  |   |        | 
|                                 
|Total                             |  | $                      | 98,491 |                      | $ | 7,745       |  | $           | 16,545 |                       | $ | 33,051 |  | $ | 41,150 | 
|                                  |  |                        |        |                      |   |             |  |             |        |                       |   |        |  |   |        | 

Deposits

Deposits
traditionally are the primary source of funds for our use in lending, making
investments and meeting liquidity demands. We have focused on raising time
deposits primarily within our market area, which is the tri-county area of
Broward, Miami-Dade and Palm Beach counties. However, we offer a variety of
deposit products, which we promote within our market area. Net deposits
decreased $4.5 million in 2007 and increased $15.4 million in 2006.

We
use brokered deposits to facilitate mortgage loan fundings in circumstances
when larger than anticipated loan volumes occur and there is limited time to
fund the additional loan demand through traditional deposit solicitation. In
general, brokered deposits can be obtained in one to three days. The rates paid
on these deposits are typically equal to or slightly less than the high end of
the interest rates in our market area. Brokered deposits amounted to $7.5
million and $8.3 million as of December 31, 2007 and December 31, 2006,
respectively.

The
following table displays the distribution of the Banks deposits at December
31, 2007, 2006 and 2005 (dollars in thousands):

|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|------------------------------------- |  | --------------- | ------- | --------------- |  | ------ | - | --------------- | ------- | ------ |  | --------------- | - | - | ------- |  |  | ------ | -
|                                      |  | At December 31, |        
|                                      |  |                 |        
|                                      |  | 2007            |         | 2006            |  | 2005   |  
|                                      |  |                 |         |                 |  |        |  
|                                      |  | Amount          |         | % of
  Deposits |  | Amount |   | % of
  Deposits |         | Amount |  | % of
  Deposits |  
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |  
|                                     
|Noninterest-bearing demand
  deposits |  | $               | 1,304   |                 |  | 1.04   | % | $               | 545     |        |  | .42             | % | $ | 390     |  |  | .34    | %
|Interest-bearing demand
  deposits    |  |                 | 967     |                 |  | .77    |   |                 | 1,780   |        |  | 1.37            |   |   | 2,382   |  |  | 2.09   |  
|Money-market deposits                 |  |                 | 26,760  |                 |  | 21.40  |   |                 | 23,239  |        |  | 17.95           |   |   | 3,509   |  |  | 3.08   |  
|Savings                               |  |                 | 475     |                 |  | .39    |   |                 | 856     |        |  | .66             |   |   | 1,159   |  |  | 1.01   |  
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|                                     
|Subtotal                              |  |                 | 29,506  |                 |  | 23.60  |   |                 | 26,420  |        |  | 20.40           |   |   | 7,440   |  |  | 6.52   |  
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|                                     
|Time deposits:                        |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|2.00%  2.99%                         |  | $               |        |                 |  |       | % | $               | 501     |        |  | .39             | % | $ | 7,201   |  |  | 6.31   | %
|3.00%  3.99%                         |  |                 | 11,721  |                 |  | 9.37   |   |                 | 16,578  |        |  | 12.80           |   |   | 48,410  |  |  | 42.44  |  
|4.00%  4.99%                         |  |                 | 44,680  |                 |  | 35.73  |   |                 | 47,282  |        |  | 36.51           |   |   | 47,819  |  |  | 41.92  |  
|5.00%  5.99%                         |  |                 | 37,801  |                 |  | 30.23  |   |                 | 38,721  |        |  | 29.90           |   |   | 3,179   |  |  | 2.79   |  
|6.00%  6.99%                         |  |                 | 1,326   |                 |  | 1.07   |   |                 |        |        |  |                |   |   |        |  |  |       |  
|7.00% - 7.99%                         |  |                 |        |                 |  |       |   |                 |        |        |  |                |   |   | 15      |  |  | .02    |  
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|                                     
|Total time deposits (1)               |  |                 | 95,528  |                 |  | 76.40  |   |                 | 103,082 |        |  | 79.60           |   |   | 106,624 |  |  | 93.48  |  
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  
|                                     
|Total deposits                        |  | $               | 125,034 |                 |  | 100.00 | % | $               | 129,502 |        |  | 100.00          | % | $ | 114,064 |  |  | 100.00 | %
|                                      |  |                 |         |                 |  |        |   |                 |         |        |  |                 |   |   |         |  |  |        |  

(1)
          Included are
Individual Retirement Accounts (IRAs) totaling $7,522,000 and $7,791,000 at
December 31, 2007 and 2006, respectively, all of which are in the form of time
deposits.

22

---



Deposits
of $100,000 or more, or Jumbo Time Deposits, are generally considered a more
unpredictable source of funds. The following table sets forth our maturity
distribution of deposits of $100,000 or more at December 31, 2007 and 2006 (in
thousands):

|                                           |  |                 |        |      |   |        | 
|------------------------------------------ |  | --------------- | ------ | ---- | - | ------ | 
|                                           |  | At December 31, |       
|                                           |  |                 |       
|                                           |  | 2007            |        | 2006 |  
|                                           |  |                 |        |      |  
|                                          
|Due three
  months or less                 |  | $               | 8,033  |      | $ | 6,858  | 
|Due more
  than three months to six months |  |                 | 16,616 |      |   | 9,898  | 
|More than
  six months to one year         |  |                 | 8,680  |      |   | 8,599  | 
|One to five
  years                        |  |                 | 5,543  |      |   | 15,544 | 
|                                           |  |                 |        |      |   |        | 
|                                          
|Total                                      |  | $               | 38,872 |      | $ | 40,899 | 
|                                           |  |                 |        |      |   |        | 

ANALYSIS OF RESULTS OF OPERATIONS

Our
profitability depends to a large extent on net interest income, which is the
difference between the interest received on earning assets, such as loans and
securities, and the interest paid on interest-bearing liabilities, principally
deposits and borrowings. Net interest income is determined by the difference
between yields earned on interest-earning assets and rates paid on
interest-bearing liabilities (interest-rate spread) and the relative amounts
of interest-earning assets and interest-bearing liabilities. Our interest-rate
spread is affected by regulatory, economic, and competitive factors that
influence interest rates, loan demand, and deposit flows. Our results of
operations are also affected by the provision for loan losses, operating
expenses such as salaries and employee benefits, occupancy and other operating
expenses including income taxes, and noninterest income such as loan prepayment
fees.

23

---



The
following table sets forth,for
the periods indicated, information regarding (i) the total dollar amount of
interest income from interest-earning assets and the resultant average yield;
(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; and (v) net interest margin. Average balances are based
on average daily balances (dollars in thousands):

|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|--------------------------------------------------------------------------------- |  | ------------------------ | ------- | ------------------------ | - | ----------------- |  | -------------- | ---- | ------------------------ | - | --------------------- |  | ---------------- | ------ | ---------------------- |  | ----------------- | - | - | ------- |  | - | ------ |  |  | ---- | -
|                                                                                  |  | Years Ended December 31, |        
|                                                                                  |  |                          |        
|                                                                                  |  | 2007                     |         | 2006                     |   | 2005              | 
|                                                                                  |  |                          |         |                          |   |                   | 
|                                                                                  |  | AverageBalance           |         | Interest
 and
 Dividends |   | AverageYield/Rate |  | AverageBalance |      | Interest
 and
 Dividends |   | Average
 Yield/
 Rate |  | Average
 Balance |        | Interestand
 Dividends |  | AverageYield/Rate |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |  
|Interest-earning assets:                                                          |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Loans                                                                             |  | $                        | 176,679 |                          | $ | 13,086            |  |                | 7.41 | %                        | $ | 175,225               |  | $                | 12,662 |                        |  | 7.23              | % | $ | 145,961 |  | $ | 9,928  |  |  | 6.80 | %
|Securities                                                                        |  |                          | 50,891  |                          |   | 2,803             |  |                | 5.51 |                          |   | 28,129                |  |                  | 1,323  |                        |  | 4.70              |   |   | 28,305  |  |   | 1,260  |  |  | 4.45 |  
|Other interest-earning assets (1)                                                 |  |                          | 4,364   |                          |   | 248               |  |                | 5.68 |                          |   | 3,851                 |  |                  | 206    |                        |  | 5.35              |   |   | 4,008   |  |   | 146    |  |  | 3.64 |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Total interest-earning assets/interest income                                     |  |                          | 231,934 |                          |   | 16,137            |  |                | 6.96 |                          |   | 207,205               |  |                  | 14,191 |                        |  | 6.85              |   |   | 178,274 |  |   | 11,334 |  |  | 6.36 |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Cash and due from banks                                                           |  |                          | 346     |                          |   |                   |  |                |      |                          |   | 311                   |  |                  |        |                        |  |                   |   |   | 211     |  |   |        |  |  |      |  
|Premises and equipment                                                            |  |                          | 3,433   |                          |   |                   |  |                |      |                          |   | 4,034                 |  |                  |        |                        |  |                   |   |   | 4,113   |  |   |        |  |  |      |  
|Other assets                                                                      |  |                          | 2,609   |                          |   |                   |  |                |      |                          |   | 3,019                 |  |                  |        |                        |  |                   |   |   | 4,383   |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Total assets                                                                      |  | $                        | 238,322 |                          |   |                   |  |                |      |                          | $ | 214,569               |  |                  |        |                        |  |                   |   | $ | 186,981 |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Interest-bearing liabilities:                                                     |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Savings, NOW and money-market deposits                                            |  |                          | 26,648  |                          |   | 1,196             |  |                | 4.49 |                          |   | 11,974                |  |                  | 390    |                        |  | 3.26              |   |   | 7,493   |  |   | 80     |  |  | 1.07 |  
|Time deposits                                                                     |  |                          | 97,269  |                          |   | 4,640             |  |                | 4.77 |                          |   | 108,448               |  |                  | 4,758  |                        |  | 4.39              |   |   | 99,236  |  |   | 3,620  |  |  | 3.65 |  
|Borrowings (4)                                                                    |  |                          | 86,089  |                          |   | 3,864             |  |                | 4.49 |                          |   | 70,614                |  |                  | 2,915  |                        |  | 4.13              |   |   | 59,050  |  |   | 2,141  |  |  | 3.63 |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                 
|Total interest-bearing liabilities/interest expense                               |  |                          | 210,006 |                          |   | 9,700             |  |                | 4.62 |                          |   | 191,036               |  |                  | 8,063  |                        |  | 4.22              |   |   | 165,779 |  |   | 5,841  |  |  | 3.52 |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Noninterest-bearing demand deposits                                               |  |                          | 1,684   |                          |   |                   |  |                |      |                          |   | 747                   |  |                  |        |                        |  |                   |   |   | 953     |  |   |        |  |  |      |  
|Other liabilities                                                                 |  |                          | 5,289   |                          |   |                   |  |                |      |                          |   | 3,214                 |  |                  |        |                        |  |                   |   |   | 2,640   |  |   |        |  |  |      |  
|Stockholders equity                                                              |  |                          | 21,343  |                          |   |                   |  |                |      |                          |   | 19,572                |  |                  |        |                        |  |                   |   |   | 17,609  |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Total liabilities and stockholders equity                                        |  | $                        | 238,322 |                          |   |                   |  |                |      |                          | $ | 214,569               |  |                  |        |                        |  |                   |   | $ | 186,981 |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Net interest income                                                               |  |                          |         |                          | $ | 6,437             |  |                |      |                          |   |                       |  | $                | 6,128  |                        |  |                   |   |   |         |  | $ | 5,493  |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                 
|Interest rate spread (2)                                                          |  |                          |         |                          |   |                   |  |                | 2.34 | %                        |   |                       |  |                  |        |                        |  | 2.63              | % |   |         |  |   |        |  |  | 2.84 | %
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Net interest margin (3)                                                           |  |                          |         |                          |   |                   |  |                | 2.78 | %                        |   |                       |  |                  |        |                        |  | 2.96              | % |   |         |  |   |        |  |  | 3.08 | %
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  
|Ratio of average interest-earning assets to average interest-bearing
 liabilities |  |                          |         |                          |   |                   |  |                | 1.10 |                          |   |                       |  |                  |        |                        |  | 1.08              |   |   |         |  |   |        |  |  | 1.08 |  
|                                                                                  |  |                          |         |                          |   |                   |  |                |      |                          |   |                       |  |                  |        |                        |  |                   |   |   |         |  |   |        |  |  |      |  

|    |                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes
 interest-earning deposits with banks, Federal funds sold and Federal Home
 Loan Bank stock dividends.                                        
|    |                                                                                                                                                        
|(2) | Interest
 rate spread represents the difference between average yield on
 interest-earning assets and the average cost of interest-bearing liabilities.
|    |                                                                                                                                                        
|(3) | Net interest
 margin is net interest income divided by average interest-earning assets.                                                                
|    |                                                                                                                                                        
|(4) | Includes
 Federal Home Loan Bank advances, junior subordinated debenture and securities
 sold under an agreement to repurchase.                        

24

---



RATE/VOLUME ANALYSIS

The
following tables set forth certain information regarding changes in interest
income and interest expense for the periods indicated. For each category of
interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (1) changes in rate (change in rate
multiplied by prior volume), (2) changes in volume (change in volume multiplied
by prior rate) and (3) changes in rate-volume (change in rate multiplied by
change in volume) (in thousands):

|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|----------------------------- |  | ---------------------------------------------------------------------------------- | ---- | ------ | - | ------------- | - | ----- | --- | - | - | ----- | -
|                              |  | Year Ended December 31,
 2007 versus 2006
 Increases (Decreases) Due to Change In: |     
|                              |  |                                                                                    |     
|                              |  | Rate                                                                               |      | Volume |   | Rate/
 Volume |   | Total |    
|                              |  |                                                                                    |      |        |   |               |   |       |    
|Interest
 income:             |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|Loans                         |  | $                                                                                  | 316  |        | $ | 105           |   | $     | 3   |   | $ | 424   |  
|Securities                    |  |                                                                                    | 227  |        |   | 1,071         |   |       | 182 |   |   | 1,480 |  
|Other
interest-earning assets |  |                                                                                    | 14   |        |   | 26            |   |       | 2   |   |   | 42    |  
|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|                             
|Total interest
income         |  |                                                                                    | 557  |        |   | 1,202         |   |       | 187 |   |   | 1,946 |  
|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|                             
|Interest
 expense:            |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|Savings, NOW and
money-market |  |                                                                                    | 148  |        |   | 478           |   |       | 181 |   |   | 807   |  
|Time
deposits                 |  |                                                                                    | 414  |        |   | (491          | ) |       | (42 | ) |   | (119  | )
|Borrowings                    |  |                                                                                    | 254  |        |   | 638           |   |       | 57  |   |   | 949   |  
|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|                             
|Total interest
expense        |  |                                                                                    | 816  |        |   | 625           |   |       | 196 |   |   | 1,637 |  
|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  
|                             
|Net interest
income           |  | $                                                                                  | (259 | )      | $ | 577           |   | $     | (9  | ) | $ | 309   |  
|                              |  |                                                                                    |      |        |   |               |   |       |     |   |   |       |  

|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|----------------------------- |  | ---------------------------------------------------------------------------------- | ----- | ------ | - | ------------- | - | ----- | ---- | - | - | ----- | 
|                              |  | Year Ended December 31,
 2006 versus 2005
 Increases (Decreases) Due to Change In: |      
|                              |  |                                                                                    |      
|                              |  | Rate                                                                               |       | Volume |   | Rate/
 Volume |   | Total |     
|                              |  |                                                                                    |       |        |   |               |   |       |     
|Interest
 income:             |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|Loans                         |  | $                                                                                  | 620   |        | $ | 1,990         |   | $     | 124  |   | $ | 2,734 | 
|Securities                    |  |                                                                                    | 71    |        |   | (8            | ) |       |     |   |   | 63    | 
|Other
interest-earning assets |  |                                                                                    | 70    |        |   | (7            | ) |       | (3   | ) |   | 60    | 
|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|                             
|Total interest
income         |  |                                                                                    | 761   |        |   | 1,975         |   |       | 121  |   |   | 2,857 | 
|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|                             
|Interest
 expense:            |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|Savings, NOW and
money-market |  |                                                                                    | 164   |        |   | 48            |   |       | 98   |   |   | 310   | 
|Time
deposits                 |  |                                                                                    | 734   |        |   | 336           |   |       | 68   |   |   | 1,138 | 
|Borrowings                    |  |                                                                                    | 297   |        |   | 418           |   |       | 59   |   |   | 774   | 
|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|                             
|Total interest
expense        |  |                                                                                    | 1,195 |        |   | 802           |   |       | 225  |   |   | 2,222 | 
|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 
|                             
|Net interest
income           |  | $                                                                                  | (434  | )      | $ | 1,173         |   | $     | (104 | ) | $ | 635   | 
|                              |  |                                                                                    |       |        |   |               |   |       |      |   |   |       | 

25

---



Year Ended December 31, 2007 Compared to Year
Ended December 31, 2006

General.
Net earnings for 2007 were $1.7 million, or $.59 per basic and $.57 per diluted
share, $92,000 less than in 2006. The primary factors explaining the decline
were a $175,000 increase in noninterest expenses coupled with a $211,000
increase in the provision for loan losses, partially offset by a $309,000
increase in net interest income.

Interest Income. Interest income totaled $16.1 million in 2007, an increase of $1.9 million, or
13.7%. This increase was primarily due to a $22.8 million, or 80.9%, increase
in the average securities portfolio balance coupled with an increase in the
average yield earned on securities, from 4.7% to 5.51%, resulting in a $1.5
million increase in interest on securities. Interest income on loans increased
by 3.4%, or $424 thousand, primarily due to an increase in the average yield
earned on loans, from 7.23% to 7.41%.

Interest Expense.Interest expense totaled $9.7 million in
2007, an increase of $1.6 million, or 20.3%, primarily as a result of an
increase in the overall cost of interest-bearing liabilities to 4.62% compared
to 4.22% a year ago, coupled with a $15.5 million or 21.9% increase in the
average balance of borrowings used to fund the Companys growth. Average
balances in deposit accounts increased only marginally by $3.5 million, or
2.9%, and interest expense on deposit accounts increased by $688,000, or 13.4%,
to $5.8 million for 2007.

Provision for Loan
Losses.
The provision for loan losses in 2007 was $476,000 compared to $265,000 in
2006. The provision for loan losses is charged to earnings as losses are
estimated to have occurred in order to bring the total allowance for loan
losses to a level deemed appropriate by management. 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 collectibility of our loan portfolio. The allowance
for loan losses totaled $692,000 or .40% of loans outstanding at December 31,
2007, compared to $974,000, or .54% of loans outstanding at December 31, 2006.
Management believes the balance in the allowance for loan losses at December
31, 2007 is adequate.

Noninterest Income.
Total noninterest income decreased $95,000, to $533,000 in 2007, from $628,000
in 2006, primarily due to a reduction of $202,000 due to no gains recognized on
the payoff of Federal Home Loan Bank advances in 2007, partially offset by a
$62,000 increase in litigation settlements and a $44,000 increase in loan
prepayment fees.

Noninterest Expenses.
Noninterest expenses totaled $3.7 million in 2007, a $175,000 increase from
2006, due primarily to a $59,000 increase in salaries and employee benefits, a
$49,000 increase in the FDIC insurance premium, and a $26,000 increase in
professional fees, all due to general increases in the cost of services.

Income Taxes. Income taxes for 2007 were $1,003,000
(an effective rate of 36.5%) compared to income taxes of $1,083,000 (an
effective rate of 37.1%) for 2006.

Year Ended December 31, 2006 Compared to Year
Ended December 31, 2005

General. Net earnings for 2006 were $1,834,000, or $.62 per basic and $.60 per diluted
share, compared to net earnings of $1,601,000 or $.55 per basic and $.53 per
diluted share for 2005. This increase in the Companys net earnings was
primarily due to an increase in net interest income which was partially offset
by an increase in noninterest expenses, all of which were due to the overall
growth of the Company.

Interest Income. Interest income increased to $14.2 million for 2006 from $11.3 million in 2005.
Interest income on loans increased to $12.7 million due primarily to an
increase in the average loan portfolio balance in 2006, and an increase in the
average yield earned from 6.80% in 2005 to 7.23% in 2006. Interest on
securities increased to $1.3 million due to an increase in the average yield
during the year ended December 31, 2006.

Interest Expense.Interest expense on deposit accounts
increased to $5.1 million in 2006, from $3.7 million in 2005. Interest expense
increased primarily because of an increase in the average balance of deposits
and the average rate paid during 2006. Interest expense on borrowings increased
to $2.9 million in 2006 from $2.1 million in 2005 primarily due to an increase
in the average balance of borrowings.

26

---



Provision for Loan
Losses. The provision for loan losses is charged
to earnings to bring the total allowance to a level deemed appropriate by
management and is based upon historical experience, the volume and type of
lending conducted by us, industry standards, the amount of nonperforming loans,
general economic conditions, particularly as they relate to our market areas,
and other factors related to the estimated collectibility of our loan
portfolio. The provision in 2006 was $265,000 compared to $149,000 for the same
period in 2005. Management believes the balance in the allowance for loan
losses of $974,000 at December 31, 2006, is adequate.

Noninterest Income. Total noninterest income decreased to
$628,000 in 2006, from $635,000 in 2005 primarily as a result of a decrease in
prepayment fees collected of $272,000 partially offset by an increase in gains
recognized on the payoff of Federal Home Loan Bank advances of $202,000 and a
litigation settlement of $93,000 in 2006.

Noninterest Expenses.
Total noninterest expenses increased to $3.6 million in 2006 from $3.4 million
in 2005, primarily due to an increase in salaries and employee benefits of
$318,000 and an increase in professional fees of $85,000 all due to the
continued growth of the Company. The increase was partially offset by a
decrease in the provision for losses on foreclosed assets of $243,000.

Income Taxes. Income taxes in 2006, were $1,083,000
(an effective rate of 37.1%) compared to income taxes of $982,000 (an effective
rate of 38.0%) in 2005.

Impact of Inflation and Changing Prices

The
financial statements and related data presented herein have been prepared in
accordance with accounting principles generally accepted in the United States
of America, which requires the measurement of financial position and operating
results in terms of historical dollars, without considering changes in the
relative purchasing power of money over time due to inflation. Unlike most
industrial companies, substantially all of our assets and liabilities are
monetary in nature. As a result, interest rates have a more significant impact
on our performance than the effects of general levels of inflation. Interest
rates do not necessarily move in the same direction or in the same magnitude as
the prices of goods and services, since such prices are affected by inflation
to a larger extent than interest rates.

Selected Quarterly Results

Selected
quarterly results of operations for the four quarters ended December 31, 2007
and 2006 are as follows (in thousands, except share amounts):

|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |   |       |  |   |       |  |   |       | 
|----------------------------------------------------- |  | ---------------- | ----- | --------------- | - | ---------------- |  | --------------- | ----- | ---------------- | - | --------------- |  | ---------------- | ----- | --------------- | - | ----- |  | - | ----- |  | - | ----- | 
|                                                      |  | 2007             |       | 2006            |  
|                                                      |  |                  |       |                 |  
|                                                      |  | Fourth
  Quarter |       | Third
  Quarter |   | Second
  Quarter |  | First
  Quarter |       | Fourth
  Quarter |   | Third
  Quarter |  | Second
  Quarter |       | First
  Quarter |  
|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |  
|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |   |       |  |   |       |  |   |       | 
|Interest income                                       |  | $                | 4,175 |                 | $ | 4,130            |  | $               | 4,005 |                  | $ | 3,827           |  | $                | 3,828 |                 | $ | 3,621 |  | $ | 3,400 |  | $ | 3,342 | 
|Interest expense                                      |  |                  | 2,531 |                 |   | 2,499            |  |                 | 2,430 |                  |   | 2,240           |  |                  | 2,258 |                 |   | 2,104 |  |   | 1,881 |  |   | 1,820 | 
|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |   |       |  |   |       |  |   |       | 
|Net interest income                                   |  |                  | 1,644 |                 |   | 1,631            |  |                 | 1,575 |                  |   | 1,587           |  |                  | 1,570 |                 |   | 1,517 |  |   | 1,519 |  |   | 1,522 | 
|Provision (credit) for loan losses                    |  |                  | (60   | )               |   | 16               |  |                 | 209   |                  |   | 311             |  |                  | 120   |                 |   | 12    |  |   | 27    |  |   | 106   | 
|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |   |       |  |   |       |  |   |       | 
|Net interest income after provision for
  loan losses |  |                  | 1,704 |                 |   | 1,615            |  |                 | 1,366 |                  |   | 1,276           |  |                  | 1,450 |                 |   | 1,505 |  |   | 1,492 |  |   | 1,416 | 
|Noninterest income                                    |  |                  | 93    |                 |   | 47               |  |                 | 159   |                  |   | 234             |  |                  | 63    |                 |   | 108   |  |   | 181   |  |   | 276   | 
|Noninterest expense                                   |  |                  | 993   |                 |   | 959              |  |                 | 905   |                  |   | 892             |  |                  | 908   |                 |   | 890   |  |   | 891   |  |   | 885   | 
|                                                      |  |                  |       |                 |   |                  |  |                 |       |                  |   |                 |  |                  |       |                 |   |       |  |   |       |  |   |       | 
|Earnings before income taxes                          |  |                  | 804   |                 |   | 703              |  |                 | 620   |                  |   | 618             |  |                  | 605   |                 |   | 723   |  |   | 782   |  |   | 807   | 
|Net earnings                                          |  |                  | 501   |                 |   | 438              |  |                 | 387   |                  |   | 416             |  |                  | 376   |                 |   | 451   |  |   | 488   |  |   | 519   | 
|Basic earnings per common share                       |  |                  | .17   |                 |   | .15              |  |                 | .13   |                  |   | .15             |  |                  | .13   |                 |   | .15   |  |   | .16   |  |   | .18   | 
|Diluted earnings per common share                     |  |                  | .17   |                 |   | .14              |  |                 | .13   |                  |   | .14             |  |                  | .12   |                 |   | .14   |  |   | .16   |  |   | .18   | 

27

---



|        |                     
|------- | --------------------
|Item 7. | Financial Statements

The
financial statements of OptimumBank as of and for the years ended December 31,
2007 and 2006 are set forth in this Form 10-KSB as Exhibit 13.1 and contain the
following information:

| |                                                                                                      
| | -----------------------------------------------------------------------------------------------------
| | Report of Independent
 Registered Public Accounting Firm                                             
| |                                                                                                      
| | Consolidated
 Balance Sheets, December 31, 2007 and 2006                                             
| |                                                                                                      
| | Consolidated
 Statements of Earnings for the Years Ended December 31, 2007 and 2006                  
| |                                                                                                      
| | Consolidated
 Statements of Stockholders Equity for the Years Ended December 31, 2007 and
 2006     
| |                                                                                                      
| | Consolidated
 Statements of Cash Flows for the Years Ended December 31, 2007 and 2006                
| |                                                                                                      
| | Notes to
 Consolidated Financial Statements, December 31, 2007 and 2006 and for the
 Years Then Ended

|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|Item 8. | Changes in and Disagreements with Accountants on Accounting and
 Financial Disclosure

Not
applicable.

|            |                        
|----------- | -----------------------
|Item 8A(T). | Controls and Procedures

(a) Evaluation of
Disclosure Controls and Procedures

We
maintain controls and procedures designed to ensure that information required
to be disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the rules and forms of the Securities and
Exchange Commission. Based upon managements evaluation of those controls and
procedures performed within the 90 days preceding the filing of this Report,
our Chief Executive Officer and Chief Financial Officer concluded that, subject
to the limitations noted below, the Companys disclosure controls and
procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of
1934) are effective to ensure that the information required to be disclosed by
the Company in the reports that it files or submits under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the U.S. Securities and Exchange Commissions rules
and forms.

(b) Managements
Report on Internal Control Over Financial Reporting

Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Exchange Act Rule
13a-15(f). Such internal controls over financial reporting were designed 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.

The
Companys management assessed the effectiveness of the Companys internal
control over financial reporting as of December 31, 2007. In making this
assessment, the Company used the criteria set forth in Internal Control-Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based upon our evaluation under the framework in Internal
Control-Integrated Framework, our management concluded that our internal
control over financial reporting was effective as of December 31, 2007.

This
annual report does not include an attestation report of the Companys
registered public accounting firm regarding internal control over financial
reporting. Managements report was not subject to attestation by the Companys
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only managements
report in this annual report.

(c) Changes in
Internal Controls

We
have made no significant changes in our internal controls over financial
reporting during the quarter ended December 31, 2007 that have materially
affected or are reasonably likely to materially affect our internal control
over financial reporting.

28

---



(d) Limitations on
the Effectiveness of Controls

Our
management, including our Chief Executive Officer and Chief Financial Officer,
does not expect that our disclosure controls and internal controls will prevent
all error and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the control.

The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

|         |                  
|-------- | -----------------
|Item 8B. | Other Information

The
Company did not fail to file any Form 8-K or to disclose any information
required to be disclosed therein during the fourth quarter of 2007.

PART III

|        |                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------
|Item 9. | Directors, Executive Officers,
Promoters and Control Persons; Compliance with Section 16(a) of the Exchange
Act

OptimumBank
has a Code of Ethics that applies to its chief executive officer, chief
operating officer, chief financial officer (who is also its chief accounting
officer) and controller, a copy of which is incorporated by reference into this
Form 10-KSB as Exhibit 14.1. This Code of Ethics is also posted on our website
at www.optimumbank.com/corpgovernance.html.

The
information contained under the sections captioned Nominees and Executive
Officers Who Are Not Directors under Proposal 1: Election of Directors and
Management Information and The Board of Directors Meetings and Committees
under Corporate Governance, and Section 16(a) Beneficial Ownership Reporting
Compliance, in the registrants definitive Proxy Statement for the Annual
Meeting of Shareholders to be held on April 24, 2008, at 10:00 a.m. to be filed
with the SEC pursuant to Regulation 14A within 120 days of the registrants
fiscal year end (the Proxy Statement), is incorporated herein by reference.

|         |                       
|-------- | ----------------------
|Item 10. | Executive Compensation

The
information contained under the sections captioned Directors Compensation,
Information Regarding Executive Officer Compensation, and Certain
Relationship and Related Transactions, in the Proxy Statement, is incorporated
herein by reference.

|         |                                                               
|-------- | --------------------------------------------------------------
|Item 11. | Security Ownership of Certain Beneficial Owners and Management

The
information contained under the section captioned Information Regarding
Beneficial Ownership of Principal Shareholders, Directors and Management in
the Proxy Statement is incorporated herein by reference.

We
had two compensation plans under which shares of our common stock were issuable
at December 31, 2007. These two plans are our Stock Option Plan, previously
approved by our stockholders, and our Non-Employee Directors Fee Compensation
and Stock Purchase Plan, which was not approved by our shareholders. We
terminated the Non-Employee Directors Plan on January 1, 2008. The following
table sets forth information as of December 31, 2007 with respect to the number
of shares of our common stock issuable pursuant to these two plans.

29

---



EQUITY COMPENSATION PLAN INFORMATION

|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 
|----------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- | ------- | ------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------- | - | ---- |  |  |  | ------ | --- | 
|Plan
 Category                                              |  | (a)
 Number of Securities
 to be Issued Upon Exercise
 of Outstanding Options
 Warrants and Rights |         | (b)
 Weighted-Average
 Exercise Price of
 Outstanding
 Options, Warrants
 and
 Rights |  | (c)
 Number of Securities
 Remaining Available for
 Future Issuance under
 Equity Compensation
 Plans (excluding
 Securities Reflected
 in Column (a) |  
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |  
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 
|Equity compensation plans approved by
 security holders     |  |                                                                                                    | 479,607 |                                                                                       |  |                                                                                                                                                       | $ | 8.06 |  |  |  | 13,561 |     | 
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 
|Equity compensation plans not approved by
 security holders |  |                                                                                                    |        |                                                                                       |  |                                                                                                                                                       |   |     |  |  |  | 5,300  | (1) | 
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 
|Total                                                       |  |                                                                                                    | 479,607 |                                                                                       |  |                                                                                                                                                       | $ | 8.06 |  |  |  | 18,861 |     | 
|                                                            |  |                                                                                                    |         |                                                                                       |  |                                                                                                                                                       |   |      |  |  |  |        |     | 

|
|
|

(1) Represents
shares available for issuance to non-employee directors for fees for attendance
at Board of Director meetings under the Non-Employee Directors Fee
Compensation and Stock Purchase Plan. This Plan was terminated effective
January 1, 2008. Under this Plan, annual accumulated fees were payable in
common shares after the end of each year at the closing price of the stock on
the last business day of each quarter in which the fees were earned. For the
year ended December 31, 2007, the Company issued 4,172 shares of stock at an
average price of $8.00-$10.25 per share to its outside directors under the
Plan. The shares are exempt from registration under Section 4(2) of the
Securities Act of 1933 which contains an exemption for transactions by an
issuer not involving any public offering.

|         |                                                                           
|-------- | --------------------------------------------------------------------------
|Item 12. | Certain Relationships and Related Transactions, and Director
 Independence

The
information contained under the section captioned Certain Relationships and
Related Transactions, and sections captioned Director Independence and The
Board of Directors Meetings and Committees under Corporate Governance in the
Proxy Statement is incorporated herein by reference.

30

---



|         |         
|-------- | --------
|Item 13. | Exhibits

(a) The following documents are filed as part of this
report

The
following exhibits are filed with or incorporated by reference into this
report. The exhibits denominated by (i) an asterisk (*) were previously filed
as a part of a Registration Statement on Form 10-SB under the Exchange Act,
filed with the Federal Deposit Insurance Corporation on March 28, 2003; (ii) a
double asterisk (**) were previously filed as a part of an Annual Report on
Form 10-KSB filed with the Securities and Exchange Commission (SEC) on March
30, 2004; (iii) a triple asterisk (***) were previously filed as part of a
current report on Form 8-K filed with the SEC on May 11, 2004; (iv) a quadruple asterisk (****) were previously filed as part of a Quarterly Report on Form 10-QSB filed with the SEC on August 12, 2004; and (v) a quintuple asterisk (*****) were previously filed as part of an Annual Report on Form 10-KSB filed with the SEC on March 31, 2006.

| |             |         |  |                                                                                                                                                
| | ----------- | ------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
| | 3. Exhibits
| |             |         |  |                                                                                                                                                
| | **          | 2.1     |  | Agreement
 and Plan of Reorganization between OptimumBank and OptimumBank Holdings, Inc.
 dated March 23, 2004                                 
|
| | ***         | 3.1     |  | Articles of
 Incorporation                                                                                                                     
|
| | ***         | 3.3     |  | Bylaws                                                                                                                                         
|
| | ****        | 4.1     |  | Form of
 stock certificate                                                                                                                     
|
| | *****       | 10.1(a) |  | Amended and
 Restated Stock Option Plan                                                                                                        
|
| | *           | 10.2(a) |  | Non-employee
 Directors Fee Compensation and Stock Purchase Plan                                                                              
|
| | *           | 10.3(a) |  | Agreement
 between OptimumBank, Albert J. Finch and Richard L. Browdy dated June 14,
 2002                                                     
|
| |             | 13.1    |  | Consolidated
 Financial Statements of OptimumBank Holdings, Inc. and Report of Independent
 Registered Accounting Firm                         
|
| |             | 14.1    |  | Code of
 Ethics for Chief Executive Officer and Senior Financial Officers                                                                      
|
| |             | 21.1    |  | Subsidiaries
 of the Registrant                                                                                                                
|
| |             | 31.1    |  | Certification
 of Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the
 Exchange Act                                         
|
| |             | 31.2    |  | Certification
 of Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the
 Exchange Act                                         
|
| |             | 32.1    |  | Certification
 of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of Sarbanes-Oxley Act of 2002
|
| |             | 32.2    |  | Certification
 of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of Sarbanes-Oxley Act of 2002

|    |                                                                                                            | 
|--- | ---------------------------------------------------------------------------------------------------------- | 
|   
|(a) | Represents a
 management contract or compensatory plan or arrangement required to be filed
 as an exhibit.

|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

The
information contained under the section captioned Independent Accountants in
the Proxy Statement is incorporated herein by reference.

31

---



SIGNATURES

In accordance
with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this
report to be duly signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Fort Lauderdale, State of Florida, on the 28st
day of March 2008.

| |                                                    
| | ---------------------------------------------------
| | OPTIMUMBANK HOLDINGS, INC.                         
| |                                                    
| | /s/ Albert
 J. Finch                               
| |                                                    
| | Albert J.
 Finch                                   
| | Chief
 Executive Officer                           
| |                                                    
| |                                                    
| | /s/ Richard
 L. Browdy                             
| |                                                    
| | Richard L.
 Browdy                                 
| | Chief
 Financial Officer (Chief Accounting Officer)

In accordance
with the Exchange Act, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities indicated on March
28, 2008

|                       |          | 
|---------------------- | -------- | 
|Signature              | Title    | 
|                       |          | 
|                       |          | 
|/s/ Albert
 J. Finch   | Director | 
|                       |          | 
|Albert J.
 Finch       |          | 
|                       |          | 
|/s/ Richard
 L. Browdy | Director | 
|                       |          | 
|Richard L.
 Browdy     |          | 
|                       |          | 
|/s/ Michael
 Bedzow    | Director | 
|                       |          | 
|Michael
 Bedzow        |          | 
|                       |          | 
|/s/ Sam
 Borek         | Director | 
|                       |          | 
|Sam Borek              |          | 
|                       |          | 
|/s/Irving P.
 Cohen    | Director | 
|                       |          | 
|Irving P.
 Cohen       |          | 
|                       |          | 
|/s/Gordon
 Deckelbaum  | Director | 
|                       |          | 
|Gordon
 Deckelbaum     |          | 
|                       |          | 
|/s/H. David
 Krinsky   | Director | 
|                       |          | 
|H. David
 Krinsky      |          | 
|                       |          | 
|/s/ Wendy
 Mitchler    | Director | 
|                       |          | 
|Wendy
 Mitchler        |          | 
|                       |          | 
|/s/ Larry
 Willis      | Director | 
|                       |          | 
|Larry Willis           |          | 

32

---



Exhibit Index

|            |  |                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description
 of Exhibit                                                                                                                        
|            |  |                                                                                                                                                
|           
|13.1        |  | Consolidated
 Financial Statements of OptimumBank Holdings, Inc. and Report of Independent
 Registered Accounting Firm                         
|           
|14.1        |  | Code of Ethics for
 Chief Executive Officer and Senior Financial Officers                                                                      
|           
|21.1        |  | Subsidiaries of
 the Registrant                                                                                                                
|           
|31.1        |  | Certification of
 Chief Executive Officer required by Rule 13a-14(a)/15d-14(a) under the
 Exchange Act                                         
|           
|31.2        |  | Certification of
 Chief Financial Officer required by Rule 13a-14(a)/15d-14(a) under the
 Exchange Act                                         
|           
|32.1        |  | Certification of
 Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of Sarbanes-Oxley Act of 2002
|           
|32.2        |  | Certification of
 Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
 pursuant to Section 906 of Sarbanes-Oxley Act of 2002

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