EXHIBIT 13.1

---



(OPTIMUMBANK HOLDINGS,INC. LOGO)

Audited Consolidated Financial
Statements

December 31, 2007 and 2006 and
for the Years Then Ended

(Together with Report of
Independent Registered Public Accounting Firm)

Index to Financial Statements

|                                                                                                |  |    
|----------------------------------------------------------------------------------------------- |  | ---
|Independent Auditors Report                                                                    |  | F-2
|                                                                                                |  |    
|Consolidated Balance Sheets, December 31,
 2007 and 2006                                        |  | F-3
|                                                                                                |  |    
|Consolidated Statements of Earnings for the
 Years Ended December 31, 2007 and 2006             |  | F-4
|                                                                                                |  |    
|Consolidated Statements of Stockholders
 Equity for the Years Ended December 31, 2007 and 2006 |  | F-5
|                                                                                                |  |    
|Consolidated Statements of Cash Flows for
 the Years Ended December 31, 2007 and 2006           |  | F-6
|                                                                                                |  |    
|Notes to Financial Statements, December 31,
 2007 and 2006 and for the Years Then Ended         |  | F-8

F-1

---



Report of
Independent Registered Public Accounting Firm

OptimumBank
Holdings, Inc.
Fort Lauderdale, Florida:

We
have audited the accompanying consolidated balance sheets of OptimumBank
Holdings, Inc. and Subsidiary (the Company) as of December 31, 2007 and 2006,
and the related consolidated statements of earnings, stockholders equity, and
cash flows for the years then ended. These financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company at
December 31, 2007 and 2006, and the results of its operations and its cash
flows for the years then ended, in conformity with U.S. generally accepted
accounting principles.

HACKER,
JOHNSON & SMITH PA 
Fort Lauderdale, Florida
March 21, 2008

F-2

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OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

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

|                                                                                                                  |  |              |         |      |   |         |  
|----------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | ---- | - | ------- | -
|                                                                                                                  |  | December 31, |        
|                                                                                                                  |  |              |        
|                                                                                                                  |  | 2007         |         | 2006 |  
|                                                                                                                  |  |              |         |      |  
|Assets                                                                                                            |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Cash and due from banks                                                                                           |  | $            | 475     |      | $ | 923     |  
|Federal funds sold                                                                                                |  |              | 226     |      |   | 681     |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total cash and cash equivalents                                                                                   |  |              | 701     |      |   | 1,604   |  
|                                                                                                                  |  |              |         |      |   |         |  
|Securities held to maturity (fair value of
 $58,117 and $33,150)                                                  |  |              | 58,471  |      |   | 33,399  |  
|Security available for sale                                                                                       |  |              | 244     |      |   | 241     |  
|Loans, net of allowance for loan losses of
 $692 and $974                                                         |  |              | 173,323 |      |   | 181,878 |  
|Federal Home Loan Bank stock                                                                                      |  |              | 2,965   |      |   | 2,956   |  
|Premises and equipment, net                                                                                       |  |              | 3,249   |      |   | 3,990   |  
|Foreclosed assets                                                                                                 |  |              | 79      |      |   |        |  
|Accrued interest receivable                                                                                       |  |              | 1,448   |      |   | 1,254   |  
|Other assets                                                                                                      |  |              | 1,067   |      |   | 381     |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total assets                                                                                                      |  | $            | 241,547 |      | $ | 225,703 |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Liabilities and Stockholders
Equity                                                                              |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Liabilities:                                                                                                      |  |              |         |      |   |         |  
|Noninterest-bearing demand deposits                                                                               |  | $            | 1,304   |      | $ | 545     |  
|Savings, NOW and money-market deposits                                                                            |  |              | 28,202  |      |   | 25,875  |  
|Time deposits                                                                                                     |  |              | 95,528  |      |   | 103,082 |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total deposits                                                                                                    |  |              | 125,034 |      |   | 129,502 |  
|                                                                                                                  |  |              |         |      |   |         |  
|Federal Home Loan Bank advances                                                                                   |  |              | 56,850  |      |   | 56,550  |  
|Other borrowings                                                                                                  |  |              | 28,900  |      |   | 10,950  |  
|Junior subordinated debenture                                                                                     |  |              | 5,155   |      |   | 5,155   |  
|Official checks                                                                                                   |  |              | 2,251   |      |   | 2,463   |  
|Other liabilities                                                                                                 |  |              | 1,076   |      |   | 611     |  
|Deferred income tax liability                                                                                     |  |              | 34      |      |   | 49      |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total liabilities                                                                                                 |  |              | 219,300 |      |   | 205,280 |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Commitments and contingencies (Notes 4, 8
 and 15)                                                                |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Stockholders equity:                                                                                             |  |              |         |      |   |         |  
|Common stock, $.01 par value; 6,000,000
 shares authorized, 2,972,507 and 2,820,280 shares issued and outstanding |  |              | 30      |      |   | 28      |  
|Additional paid-in capital                                                                                        |  |              | 17,308  |      |   | 15,930  |  
|Retained earnings                                                                                                 |  |              | 4,913   |      |   | 4,474   |  
|Accumulated other comprehensive loss                                                                              |  |              | (4      | )    |   | (9      | )
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total stockholders equity                                                                                        |  |              | 22,247  |      |   | 20,423  |  
|                                                                                                                  |  |              |         |      |   |         |  
|                                                                                                                  |  |              |         |      |   |         |  
|Total liabilities and stockholders
equity                                                                        |  | $            | 241,547 |      | $ | 225,703 |  
|                                                                                                                  |  |              |         |      |   |         |  

See
Accompanying Notes to Consolidated Financial Statements.

F-3

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated Statements of
Earnings 
(In thousands, except share amounts)

|                                                     |  |                         |        |      |   |        | 
|---------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ | 
|                                                     |  | Year Ended December 31, |       
|                                                     |  |                         |       
|                                                     |  | 2007                    |        | 2006 |  
|                                                     |  |                         |        |      |  
|Interest income:                                     |  |                         |        |      |   |        | 
|Loans                                                |  | $                       | 13,086 |      | $ | 12,662 | 
|Securities                                           |  |                         | 2,803  |      |   | 1,323  | 
|Other                                                |  |                         | 248    |      |   | 206    | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Total interest income                                |  |                         | 16,137 |      |   | 14,191 | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Interest expense:                                    |  |                         |        |      |   |        | 
|Deposits                                             |  |                         | 5,836  |      |   | 5,148  | 
|Borrowings                                           |  |                         | 3,864  |      |   | 2,915  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Total interest expense                               |  |                         | 9,700  |      |   | 8,063  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Net interest income                                  |  |                         | 6,437  |      |   | 6,128  | 
|                                                     |  |                         |        |      |   |        | 
|Provision for loan losses                            |  |                         | 476    |      |   | 265    | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Net interest income after provision for
 loan losses |  |                         | 5,961  |      |   | 5,863  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Noninterest income:                                  |  |                         |        |      |   |        | 
|Service charges and fees                             |  |                         | 79     |      |   | 69     | 
|Loan prepayment fees                                 |  |                         | 294    |      |   | 250    | 
|Gain on early extinguishment of debt                 |  |                         |       |      |   | 202    | 
|Litigation settlement                                |  |                         | 155    |      |   | 93     | 
|Other                                                |  |                         | 5      |      |   | 14     | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Total noninterest income                             |  |                         | 533    |      |   | 628    | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Noninterest expenses:                                |  |                         |        |      |   |        | 
|Salaries and employee benefits                       |  |                         | 2,061  |      |   | 2,002  | 
|Occupancy and equipment                              |  |                         | 662    |      |   | 646    | 
|Data processing                                      |  |                         | 171    |      |   | 172    | 
|Professional fees                                    |  |                         | 280    |      |   | 254    | 
|Insurance                                            |  |                         | 59     |      |   | 67     | 
|Stationary and supplies                              |  |                         | 39     |      |   | 36     | 
|Other                                                |  |                         | 477    |      |   | 397    | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Total noninterest expenses                           |  |                         | 3,749  |      |   | 3,574  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Earnings before income taxes                         |  |                         | 2,745  |      |   | 2,917  | 
|                                                     |  |                         |        |      |   |        | 
|Income taxes                                         |  |                         | 1,003  |      |   | 1,083  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Net earnings                                         |  | $                       | 1,742  |      | $ | 1,834  | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Net earnings per share:                              |  |                         |        |      |   |        | 
|Basic                                                |  | $                       | .59    |      | $ | .62    | 
|                                                     |  |                         |        |      |   |        | 
|                                                     |  |                         |        |      |   |        | 
|Diluted                                              |  | $                       | .57    |      | $ | .60    | 
|                                                     |  |                         |        |      |   |        | 

See
Accompanying Notes to Consolidated Financial Statements.

F-4

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated
Statements of Stockholders Equity

Years Ended December 31, 2007 and 2006
(Dollars in thousands)

|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|---------------------------------------------------------------------------- |  | ------------ | --------- | ---------------------------- | - | ------------------ |  | ------------------------------------------ | ------ | ---------------------------- | - | ------ | - | - | -- | - | - | ------ | -
|                                                                             |  |              |           | Additional
 Paid-In
 Capital |   | Retained
 Earnings |  | Accumulated
 Other
 Compre-
 hensive
 Loss |        | Total
 Stockholders
 Equity |  
|                                                                             |  |              |           |                              |   |                    | 
|                                                                             |  | Common Stock |           |                              |   |                    | 
|                                                                             |  |              |           |                              |   |                    | 
|                                                                             |  | Shares       |           | Amount                       |   |                    |  |                                            |       
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Balance at December 31,
2005                                                 |  |              | 2,663,775 |                              | $ | 27                 |  | $                                          | 14,141 |                              | $ | 4,249  |   | $ | (7 | ) | $ | 18,410 |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Proceeds from sale of common
stock                                           |  |              | 1,277     |                              |   |                   |  |                                            | 14     |                              |   |       |   |   |   |   |   | 14     |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Proceeds from exercise of common
stock
 options including tax benefit of $37 |  |              | 21,150    |                              |   |                   |  |                                            | 167    |                              |   |       |   |   |   |   |   | 167    |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|5% stock dividend                                                            |  |              | 134,078   |                              |   | 1                  |  |                                            | 1,608  |                              |   | (1,609 | ) |   |   |   |   |       |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Comprehensive income:                                                        |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Net
earnings                                                                 |  |              |          |                              |   |                   |  |                                            |       |                              |   | 1,834  |   |   |   |   |   | 1,834  |  
|Net change in
unrealized loss on security
 available for sale, net of tax    |  |              |          |                              |   |                   |  |                                            |       |                              |   |       |   |   | (2 | ) |   | (2     | )
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Comprehensive
income                                                         |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   | 1,832  |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Balance at December 31,
2006                                                 |  |              | 2,820,280 |                              | $ | 28                 |  | $                                          | 15,930 |                              | $ | 4,474  |   | $ | (9 | ) | $ | 20,423 |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Proceeds from sale of common
stock                                           |  |              | 4,172     |                              |   |                   |  |                                            | 37     |                              |   |       |   |   |   |   |   | 37     |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Proceeds from exercise of common
stock
 options                              |  |              | 7,166     |                              |   |                   |  |                                            | 41     |                              |   |       |   |   |   |   |   | 41     |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|5% stock dividend (fractional
shares paid
 in cash)                          |  |              | 140,889   |                              |   | 2                  |  |                                            | 1,300  |                              |   | (1,303 | ) |   |   |   |   | (1     | )
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Comprehensive income:                                                        |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Net
earnings                                                                 |  |              |          |                              |   |                   |  |                                            |       |                              |   | 1,742  |   |   |   |   |   | 1,742  |  
|Net change in
unrealized loss on security
 available for sale, net of tax    |  |              |          |                              |   |                   |  |                                            |       |                              |   |       |   |   | 5  |   |   | 5      |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Comprehensive
income                                                         |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   | 1,747  |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  
|Balance at December 31,
2007                                                 |  |              | 2,972,507 |                              | $ | 30                 |  | $                                          | 17,308 |                              | $ | 4,913  |   | $ | (4 | ) | $ | 22,247 |  
|                                                                             |  |              |           |                              |   |                    |  |                                            |        |                              |   |        |   |   |    |   |   |        |  

See
Accompanying Notes to Consolidated Financial Statements.

F-5

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Consolidated
Statements of Cash Flows
(In thousands)

|                                                                                     |  |                         |         |      |   |         |  
|------------------------------------------------------------------------------------ |  | ----------------------- | ------- | ---- | - | ------- | -
|                                                                                     |  | Year Ended December 31, |        
|                                                                                     |  |                         |        
|                                                                                     |  | 2007                    |         | 2006 |  
|                                                                                     |  |                         |         |      |  
|Cash flows from operating
activities:                                                |  |                         |         |      |   |         |  
|Net
earnings                                                                         |  | $                       | 1,742   |      | $ | 1,834   |  
|Adjustments to
reconcile net earnings to
 net cash provided by operating activities: |  |                         |         |      |   |         |  
|Depreciation and
amortization                                                        |  |                         | 225     |      |   | 237     |  
|Provision for
loan losses                                                            |  |                         | 476     |      |   | 265     |  
|Gain on early
extinguishment of debt                                                 |  |                         |        |      |   | (202    | )
|Deferred income
tax benefit                                                          |  |                         | (13     | )    |   | (138    | )
|Net amortization
of fees, premiums and
 discounts                                    |  |                         | 372     |      |   | 635     |  
|Increase in
accrued interest receivable                                              |  |                         | (194    | )    |   | (224    | )
|(Increase)
decrease in other assets                                                  |  |                         | (686    | )    |   | 606     |  
|Increase in
official checks and other
 liabilities                                   |  |                         | 253     |      |   | 746     |  
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Net cash
provided by operating activities                                            |  |                         | 2,175   |      |   | 3,759   |  
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash flows from investing
activities:                                                |  |                         |         |      |   |         |  
|Purchases of
securities held to maturity                                             |  |                         | (34,206 | )    |   | (12,038 | )
|Principal
repayments and calls of
 securities held to maturity                       |  |                         | 9,193   |      |   | 3,967   |  
|Net decrease
(increase) in loans                                                     |  |                         | 7,569   |      |   | (12,262 | )
|Sale (purchase)
of premises and equipment,
 net                                      |  |                         | 516     |      |   | (153    | )
|Purchase of
Federal Home Loan Bank stock                                             |  |                         | (9      | )    |   | (244    | )
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Net cash used
in investing activities                                                |  |                         | (16,937 | )    |   | (20,730 | )
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash flows from financing
activities:                                                |  |                         |         |      |   |         |  
|Net (decrease)
increase in deposits                                                  |  |                         | (4,468  | )    |   | 15,438  |  
|Net increase
(decrease) in other borrowings                                          |  |                         | 17,950  |      |   | (2,000  | )
|Proceeds from
sale of common stock                                                   |  |                         | 37      |      |   | 14      |  
|Proceeds from
Federal Home Loan Bank
 advances                                       |  |                         | 11,300  |      |   | 18,802  |  
|Repayment of
Federal Home Loan Bank
 advances                                        |  |                         | (11,000 | )    |   | (15,000 | )
|Proceeds from
exercise of common stock
 options                                      |  |                         | 41      |      |   | 130     |  
|Tax benefit
associated with exercise of
 common stock options                        |  |                         |        |      |   | 37      |  
|Fractional
shares of stock dividend paid in
 cash                                    |  |                         | (1      | )    |   |        |  
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Net cash
provided by financing activities                                            |  |                         | 13,859  |      |   | 17,421  |  
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Net (decrease) increase in cash
and cash
 equivalents                                |  |                         | (903    | )    |   | 450     |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash and cash equivalents at
beginning of
 the year                                  |  |                         | 1,604   |      |   | 1,154   |  
|                                                                                     |  |                         |         |      |   |         |  
|                                                                                     |  |                         |         |      |   |         |  
|Cash and cash equivalents at end
of the
 year                                        |  | $                       | 701     |      | $ | 1,604   |  
|                                                                                     |  |                         |         |      |   |         |  

(continued)

F-6

---



OPTIMUMBANK
HOLDINGS, INC. AND SUBSIDIARY

Consolidated
Statements of Cash Flows, Continued
(In thousands)

|                                                                                                                               |  |                         |       |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------- | ----- | ---- | - | ----- | -
|                                                                                                                               |  | Year Ended December 31, |      
|                                                                                                                               |  |                         |      
|                                                                                                                               |  | 2007                    |       | 2006 |  
|                                                                                                                               |  |                         |       |      |  
|Supplemental disclosure of cash flow information:                                                                              |  |                         |       |      |   |       |  
|Cash paid during
  the year for:                                                                                               |  |                         |       |      |   |       |  
|Interest                                                                                                                       |  | $                       | 9,697 |      | $ | 8,050 |  
|                                                                                                                               |  |                         |       |      |   |       |  
|                                                                                                                              
|Income taxes                                                                                                                   |  | $                       | 1,014 |      | $ | 1,033 |  
|                                                                                                                               |  |                         |       |      |   |       |  
|                                                                                                                              
|Noncash
  transactions:                                                                                                        |  |                         |       |      |   |       |  
|Change in
  accumulated other comprehensive income, net change in unrealized loss on
  security available for sale, net of tax |  | $                       | 5     |      | $ | (2    | )
|                                                                                                                               |  |                         |       |      |   |       |  
|                                                                                                                              
|Common stock
  dividend                                                                                                        |  | $                       | 1,302 |      | $ | 1,609 |  
|                                                                                                                               |  |                         |       |      |   |       |  
|                                                                                                                              
|Loan
  reclassified to foreclosed assets                                                                                       |  | $                       | 79    |      | $ |      |  
|                                                                                                                               |  |                         |       |      |   |       |  

See Accompanying Notes to Consolidated Financial
Statements.

F-7

---



OPTIMUMBANK
HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

December
31, 2007 and 2006 and the Years Then Ended

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting
  Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Organization. OptimumBank Holdings, Inc. (the
  Holding Company) is a one-bank holding company and owns 100% of OptimumBank
  (the Bank), a state (Florida)-chartered commercial bank (collectively, the
  Company). The Holding Companys only business is the operation of the Bank.
  The Banks deposits are insured by the Federal Deposit Insurance Corporation.
  The Bank offers a variety of community banking services to individual and
  corporate customers through its three banking offices located in Broward
  County, Florida.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Basis of
  Presentation. The accompanying consolidated financial statements include the accounts of
  the Holding Company and the Bank. All significant intercompany accounts and
  transactions have been eliminated in consolidation. The accounting and
  reporting practices of the Company conform to U.S. generally accepted
  accounting principles and to general practices within the banking industry.
  The following summarizes the more significant of these policies and
  practices:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Use of Estimates. In preparing consolidated financial
  statements in conformity with U.S. generally accepted accounting principles,
  management is required to make estimates and assumptions that affect the
  reported amounts of assets and liabilities as of the date of the consolidated
  balance sheet and reported amounts of revenues and expenses during the
  reporting period. Actual results could differ from those estimates. A
  material estimate that is particularly susceptible to significant change in
  the near term relates to the determination of the allowance for loan losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Cash and Cash Equivalents. For purposes of the consolidated statements of cash flows, cash and cash
  equivalents include cash and balances due from banks and federal funds sold,
  all of which mature within ninety days.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company is required by law or regulation to
  maintain cash reserves in the form of vault cash or in accounts with other
  banks. There were no reserve balances required at December 31, 2007 and 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Securities. Securities may be classified as either
  trading, held to maturity or available for sale. Trading securities are held
  principally for resale and recorded at their fair values. Unrealized gains
  and losses on trading securities are included immediately in earnings. Held
  to maturity securities are those which management has the positive intent and
  ability to hold to maturity and are reported at amortized cost. Available for
  sale securities consist of securities not classified as trading securities
  nor as held to maturity securities. Unrealized holding gains and losses, net
  of tax on available for sale securities are reported as a net amount in accumulated
  other comprehensive loss in stockholders equity until realized. Gains and
  losses on the sale of available for sale securities are determined using the
  specific-identification method. Premiums and discounts on securities
  available for sale and held to maturity are recognized in interest income
  using the interest method over the period to maturity.

(continued)

F-8

---



OPTIMUMBANK
HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting
  Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Loans. Loans that management has the intent
  and ability to hold for the foreseeable future or until maturity or pay-off
  are reported at their outstanding principal adjusted for any charge-offs, the
  allowance for loan losses, and any deferred fees or costs.                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Commitment fees, and loan origination fees are
  deferred and certain direct origination costs are capitalized. Both are
  recognized as an adjustment of the yield of the related loan.                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The accrual of interest on loans is discontinued at
  the time the loan is ninety days delinquent unless the loan is well
  collateralized and in process of collection. In all cases, loans are placed
  on nonaccrual or charged-off at an earlier date if collection of principal or
  interest is considered doubtful.                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | All interest accrued but not collected for loans
  that are placed on nonaccrual or charged-off is reversed against interest
  income. The interest on these loans is accounted for on the cash-basis or
  cost-recovery method, until qualifying for return to accrual. Loans are
  returned to accrual status when all the principal and interest amounts
  contractually due are brought current and future payments are reasonably
  assured.                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Allowance for Loan Losses. 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 management believes the
  uncollectibility of a loan balance is confirmed. Subsequent recoveries, if
  any, are credited to the allowance.                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The allowance for loan losses is evaluated on a
  regular basis by management and is based upon managements periodic review of
  the collectibility of the loans 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, an allowance is established when the discounted
  cash flows (or collateral value or observable market price) of the impaired
  loans are lower than the carrying value of those loans. The general component
  covers all other loans and is based on historical loss experience adjusted
  for qualitative factors.                                                                                         

(continued)

F-9

---



OPTIMUMBANK
HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial
Statements, Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary
  of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Allowance for
  Loan Losses, Continued. A loan is considered impaired
  when, based on current information and events, it is probable that the
  Company will be unable to collect the scheduled payments of principal or
  interest when due. Factors considered by management 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. Management determines 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. Impairment is measured 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.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Large groups of smaller balance homogeneous loans
  are collectively evaluated for impairment. Accordingly, the Company does not
  separately identify individual consumer and residential loans for impairment
  disclosures.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Foreclosed Assets. Assets repossessed or acquired by foreclosure or deed in lieu of foreclosure
  are carried at the lower of estimated fair value or the balance of the loan
  on the assets at date of acquisition. Costs relating to the development and
  improvement of assets are capitalized, whereas those relating to holding the
  assets are charged to expense. Valuations are periodically performed by
  management and losses are charged to earnings if the carrying value of the
  assets exceeds its estimated fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Premises and
  Equipment. Land is stated at cost. Buildings and
  improvements, furniture, fixtures, equipment, and leasehold improvements are
  stated at cost, less accumulated depreciation and amortization. Depreciation
  and amortization expense are computed using the straight-line method over the
  estimated useful life of each type of asset or lease term, if shorter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

(continued)

F-10

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   
|    | Preferred Securities of Unconsolidated
 Subsidiary Trust. On September 30, 2004, the Company acquired the common
 stock of OptimumBank Holdings Capital Trust I (Issuer Trust), an
 unconsolidated subsidiary trust. The Issuer Trust used the proceeds from the
 issuance of $5,000,000 of its preferred securities to third-party investors
 and common stock to acquire a $5,155,000 debenture issued by the Company.
 This debenture and certain capitalized costs associated with the issuance of
 the preferred stock comprise the Issuer Trusts only assets and the interest
 payments from the debentures finance the distributions paid on the preferred
 securities. The Company recorded the debenture in Junior Subordinated
 Debenture and its equity interest in the business trust in Other Assets on
 the consolidated balance sheets.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Company
 has entered into agreements which, taken collectively, fully and
 unconditionally guarantee the preferred securities of the Issuer Trust
 subject to the terms of the guarantee.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The
 debenture held by the Issuer Trust currently qualifies as Tier I capital for
 the Company under Federal Reserve Board guidelines.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Transfer of Financial Assets.
 Transfers of financial assets are accounted for as sales, when control over
 the assets has been surrendered. Control over transferred assets is deemed to
 be surrendered when (1) the assets have been isolated from the Company, (2)
 the transferee obtains the right (free of conditions that constrain it from
 taking advantage of that right) to pledge or exchange the transferred assets,
 and (3) the Company does not maintain effective control over the transferred
 assets through an agreement to repurchase them before their maturity.                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Income Taxes.
 Deferred income tax assets and liabilities are recorded to reflect the tax
 consequences on future years of temporary differences between revenues and expenses
 reported for financial statement and those reported for income tax purposes.
 Deferred tax assets and liabilities are measured using the enacted tax rates
 expected to apply to taxable income in the years in which those temporary
 differences are expected to be realized or settled. Valuation allowances are
 provided against assets which are not likely to be realized.                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | The Holding
 Company and the Bank file a consolidated income tax return. Income taxes are
 allocated proportionately to the Holding Company and subsidiary as though
 separate income tax returns were filed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Advertising.
 The Company expenses all media advertising as incurred. Media advertising
 expense included in other in the accompanying consolidated statements of
 earnings was approximately $40,000 and $32,000 during the years ended
 December 31, 2007 and 2006, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

(continued)

F-11

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   
|    | Stock Compensation Plans. Effective January 1, 2006, the Company
 adopted the fair value recognition provisions of FASB Statement No. 123(R), Share-Based Payment(SFAS
123(R)), using the
 modified-prospective-transition method. Under that transition method,
 compensation cost recognized includes: (a) compensation cost for all
 share-based payments granted prior to, but not yet vested as of January 1,
 2006, based on the grant date fair value calculated in accordance with the
 original provisions of SFAS 123, Accounting
 for Stock-Based Compensation (as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition
 and Disclosure) (collectively SFAS 123) and (b) compensation cost
 for all share-based payments granted subsequent to December 31, 2005, based
 on the grant-date fair value estimated in accordance with the provisions of
 SFAS 123(R). At December 31, 2005, all outstanding options had vested.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Earnings Per Share.
 Basic earnings per share is computed on the basis of the weighted-average
 number of common shares outstanding. Diluted earnings per share is computed
 based on the weighted-average number of shares outstanding plus the effect of
 outstanding stock options, computed using the treasury stock method. All
 amounts reflect the 5% stock dividends declared in May 2007 and April 2006.
 Earnings per common share have been computed based on the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

|                                                                                                          |  |  |                         |  |  |           | 
|--------------------------------------------------------------------------------------------------------- |  |  | ----------------------- |  |  | --------- | 
|                                                                                                          |  |  | Year Ended December 31, | 
|                                                                                                          |  |  |                         | 
|                                                                                                          |  |  | 2007                    |  |  | 2006      | 
|                                                                                                          |  |  |                         |  |  |           | 
|Weighted-average number of common shares
 outstanding used to calculate basic earnings per common share   |  |  | 2,964,026               |  |  | 2,953,673 | 
|                                                                                                          |  |  |                         |  |  |           | 
|Effect of dilutive stock options                                                                          |  |  | 69,064                  |  |  | 125,962   | 
|                                                                                                          |  |  |                         |  |  |           | 
|                                                                                                          |  |  |                         |  |  |           | 
|Weighted-average number of common shares
 outstanding used to calculate diluted earnings per common share |  |  | 3,033,090               |  |  | 3,079,635 | 
|                                                                                                          |  |  |                         |  |  |           | 

| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | The
 following options were excluded from the calculation of EPS due to the
 exercise price being above the average market price:

|                                      |  |                     |         |                 |   |             |  |  |           | 
|------------------------------------- |  | ------------------- | ------- | --------------- | - | ----------- |  |  | --------- | 
|                                      |  | Number
 Outstanding |         | Exercise
 Price |   | Expire      | 
|                                      |  |                     |         |                 |   |             | 
|                                     
|For the
year ended December 31, 2007: |  |                     |         |                 |   |             |  |  |           | 
|Options                               |  |                     | 254,678 |                 | $ | 10.00-12.49 |  |  | 2014-2015 | 

| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Off-Balance-Sheet Financial Instruments.
 In the ordinary course of business the Company has entered into
 off-balance-sheet financial instruments consisting of commitments to extend
 credit. Such financial instruments are recorded in the consolidated financial
 statements when they are funded.

(continued)

F-12

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | Fair Values of Financial Instruments.
 The fair value of a financial instrument is the current amount that would be
 exchanged between willing parties, other than in a forced liquidation. Fair
 value is best determined based upon quoted market prices. However, in many
 instances, there are no quoted market prices for the Companys various
 financial instruments. In cases where quoted market prices are not available,
 fair values are based on estimates using present value or other valuation
 techniques. Those techniques are significantly affected by the assumptions
 used, including the discount rate and estimates of future cash flows.
 Accordingly, the fair value estimates may not be realized in an immediate settlement
 of the instrument or may not necessarily represent the underlying fair value
 of the Company. The following methods and assumptions were used by the
 Company in estimating fair values of financial instruments disclosed herein:
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Cash and Cash Equivalents.
 The carrying amounts of cash and cash equivalents approximate their fair
 value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Securities.
 Fair values for securities are based on quoted market prices, where
 available. If quoted market prices are not available, fair values are based
 on quoted market prices of comparable instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Federal Home Loan Bank Stock. Fair value of the Companys investment
 in Federal Home Loan Bank stock is based on its redemption value, which is
 its cost of $100 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Loans. For
 variable-rate loans that reprice frequently and have no significant change in
 credit risk, fair values are based on carrying values. Fair values for
 certain fixed-rate mortgage (e.g. one-to-four family residential), commercial
 real estate and commercial loans are estimated using discounted cash flow
 analyses, using interest rates currently being offered for loans with similar
 terms to borrowers of similar credit quality. Fair values for nonperforming
 loans are estimated using discounted cash flow analyses or underlying collateral
 values, where applicable.                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Deposit Liabilities. The fair values disclosed for demand,
 NOW, money-market and savings deposits are, by definition, equal to the
 amount payable on demand at the reporting date (that is, their carrying
 amounts). Fair values for fixed-rate time deposits are estimated using a
 discounted cash flow calculation that applies interest rates currently being
 offered on time deposits to a schedule of aggregated expected monthly
 maturities of time deposits.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Accrued Interest. The carrying amounts of accrued
 interest approximate their fair values.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Federal Home Loan Bank Advances, Junior
 Subordinated Debenture and Other Borrowings.Fair values
 of Federal Home Loan Bank advances, junior subordinated debenture and other
 borrowings which consist of securities sold under an agreement to repurchase
 are estimated using discounted cash flow analysis based on the Companys
 current incremental borrowings rates for similar types of borrowings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

(continued)

F-13

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Summary of Significant Accounting Policies, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | Fair Values of Financial Instruments,
 Continued.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    | Off-Balance-Sheet Financial Instruments.
 Fair values for off-balance-sheet lending commitments are based on fees
 currently charged to enter into similar agreements, taking into account the
 remaining terms of the agreements and the counterparties credit standing.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Comprehensive Income.
 Accounting principles generally require that recognized revenue, expenses,
 gains and losses be included in net earnings. Although certain changes in
 assets and liabilities, such as unrealized gains and losses on available for
 sale securities, are reported as a separate component of the equity section
 of the consolidated balance sheets, such items along with net earnings, are
 components of comprehensive income. The only component of other comprehensive
 income is the net change in unrealized loss on securities available for sale
 for the years ended December 31, 2007 and 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Recent Pronouncements. In September 2006, Financial Accounting
 Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements
 (SFAS 157). SFAS 157 defines fair value, establishes a framework for
 measuring fair value in accordance with generally accepted accounting
 principles, and expands disclosures about fair value measurements. This
 statement is effective for the Company as of January 1, 2008. Management is
 in the process of evaluating the impact of SFAS 157 and does not anticipate
 it will have any effect on the Companys consolidated financial condition or
 results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In February
 2007, the FASB issued SFAS No. 159, The
 Fair Value Option for Financial Assets and Financial Liabilities
 (SFAS 159). SFAS 159 provides the Company with an option to report selected
 financial assets and liabilities at fair value. This statement is effective
 for the Company as of January 1, 2008. Management is in the process of
 evaluating the impact of SFAS 159 and does not anticipate it will have any
 effect on the Companys consolidated financial condition or results of
 operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | In December
 2007, the FASB issued SFAS No. 141(R), Business
 Combinations (SFAS 141(R)). SFAS 141(R) is effective for fiscal
 years beginning after December 15, 2008 and early implementation is not
 permitted. SFAS 141(R) requires the acquiring entity in a business
 combination to recognize all (and only) the assets acquired and liabilities
 assumed in the transaction; establishes the acquisition date fair value as
 the measurement objective for all assets acquired and liabilities assumed;
 and requires the acquirer to disclose to investors and other users all of the
 information they need to evaluate and understand the nature and financial
 effect of the business combination. Acquisition related costs including
 finders fees, advisory, legal, accounting valuation and other professional
 and consulting fees are required to be expensed as incurred. Management is in
 the process of evaluating the impact of SFAS 141(R) and does not anticipate
 it will have any current effect on the Companys consolidated financial
 condition or results of operations.

(continued)

F-14

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements, Continued

|    |                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Securities                                                                                                                                                        
|    |                                                                                                                                                                   
|    | Securities have been
  classified according to managements intent. The carrying amount of
  securities and approximate fair values are as follows (in thousands):

|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|---------------------------- |  | ---------------- | ------ | -------------------------- | - | --------------------------- |  | ------------ | ---- | - | - | ------ | 
|                             |  | Amortized
  Cost |        | Gross
  Unrealized
  Gains |   | Gross
  Unrealized
  Losses |  | Fair
  Value |     
|                             |  |                  |        |                            |   |                             |  |              |     
|At December 31, 2007:        |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Securities Held to Maturity: |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Mortgage-backed securities   |  | $                | 58,371 |                            | $ | 229                         |  | $            | (583 | ) | $ | 58,017 | 
|State of Israel bond         |  |                  | 100    |                            |   |                            |  |              |     |   |   | 100    | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  | $                | 58,471 |                            | $ | 229                         |  | $            | (583 | ) | $ | 58,117 | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Security Available for Sale- |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Mutual fund                  |  | $                | 250    |                            | $ |                            |  | $            | (6   | ) | $ | 244    | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|At December 31, 2006:        |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Securities Held to Maturity: |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Mortgage-backed securities   |  | $                | 33,299 |                            | $ | 272                         |  | $            | (521 | ) | $ | 33,050 | 
|State of Israel bond         |  |                  | 100    |                            |   |                            |  |              |     |   |   | 100    | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  | $                | 33,399 |                            | $ | 272                         |  | $            | (521 | ) | $ | 33,150 | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Security Available for Sale- |  |                  |        |                            |   |                             |  |              |      |   |   |        | 
|Mutual fund                  |  | $                | 250    |                            | $ |                            |  | $            | (9   | ) | $ | 241    | 
|                             |  |                  |        |                            |   |                             |  |              |      |   |   |        | 

| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There were no securities
  sold during the years ended December 31, 2007 or 2006.                                                                                                                                         
| |                                                                                                                                                                                                                           
| | Securities with gross
  unrealized losses at December 31, 2007, aggregated by investment category and
  length of time that individual securities have been in a continuous loss
  position, is as follows (in thousands):

|                               |  |                             |      |                    |   |                             |  |              |      |   |   |        | 
|------------------------------ |  | --------------------------- | ---- | ------------------ | - | --------------------------- |  | ------------ | ---- | - | - | ------ | 
|                               |  | Less Than Twelve Months     |      | Over Twelve Months |  
|                               |  |                             |      |                    |  
|                               |  | Gross
  Unrealized
  Losses |      | Fair
  Value       |   | Gross
  Unrealized
  Losses |  | Fair
  Value |     
|                               |  |                             |      |                    |   |                             |  |              |     
|Securities
  held to maturity- |  |                             |      |                    |   |                             |  |              |      |   |   |        | 
|Mortgage-backed securities     |  | $                           | (291 | )                  | $ | 25,298                      |  | $            | (292 | ) | $ | 15,412 | 
|                               |  |                             |      |                    |   |                             |  |              |      |   |   |        | 
|                              
|Security
  available for sale- |  |                             |      |                    |   |                             |  |              |      |   |   |        | 
|Mutual fund                    |  | $                           |     |                    | $ |                            |  | $            | (6   | ) | $ | 244    | 
|                               |  |                             |      |                    |   |                             |  |              |      |   |   |        | 

(continued)

F-15

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements, Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Securities,
  Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | Management evaluates
  securities for other-than-temporary impairment at least on a quarterly basis,
  and more frequently when economic or market concerns warrant such evaluation.
  Consideration is given to (1) the length of time and the extent to which the
  fair value has been less than cost, (2) the financial condition and near-term
  prospects of the issuer, and (3) the intent and ability of the Company to
  retain its investment in the issuer for a period of time sufficient to allow for
  any anticipated recovery in fair value.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The unrealized losses on
  investment securities held to maturity were caused by market changes. It is
  expected that the securities would not be settled at a price less than the
  par value of the investments. Because the decline in fair value is
  attributable to market changes and not credit quality, and because the
  Company has the ability and intent to hold these investments until a market
  price recovery or maturity, these investments are not considered other-than-temporarily
  impaired.                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(3) | Loans                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | The components of loans
  are as follows (in thousands):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                           |  |                 |         |      |   |         |  
|------------------------------------------ |  | --------------- | ------- | ---- | - | ------- | -
|                                           |  | At December 31, |        
|                                           |  |                 |        
|                                           |  | 2007            |         | 2006 |  
|                                           |  |                 |         |      |  
|                                          
|Residential real estate                    |  | $               | 65,908  |      | $ | 70,868  |  
|Multi-family real estate                   |  |                 | 10,275  |      |   | 10,769  |  
|Commercial real estate                     |  |                 | 75,777  |      |   | 68,852  |  
|Land and construction                      |  |                 | 21,093  |      |   | 31,022  |  
|Consumer                                   |  |                 | 15      |      |   | 227     |  
|                                           |  |                 |         |      |   |         |  
|                                           |  |                 |         |      |   |         |  
|Total loans                                |  |                 | 173,068 |      |   | 181,738 |  
|                                           |  |                 |         |      |   |         |  
|Add (deduct):                              |  |                 |         |      |   |         |  
|Net deferred loan fees, costs and
premiums |  |                 | 970     |      |   | 1,163   |  
|Loan discounts                             |  |                 | (23     | )    |   | (49     | )
|Allowance for loan losses                  |  |                 | (692    | )    |   | (974    | )
|                                           |  |                 |         |      |   |         |  
|                                           |  |                 |         |      |   |         |  
|Loans, net                                 |  | $               | 173,323 |      | $ | 181,878 |  
|                                           |  |                 |         |      |   |         |  

(continued)

F-16

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements, Continued

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

|                          |  |                         |      |      |   |     |  
|------------------------- |  | ----------------------- | ---- | ---- | - | --- | -
|                          |  | Year Ended December 31, |     
|                          |  |                         |     
|                          |  | 2007                    |      | 2006 |  
|                          |  |                         |      |      |  
|                         
|Beginning balance         |  | $                       | 974  |      | $ | 777 |  
|Charge-offs               |  |                         | (758 | )    |   | (68 | )
|Provision for loan losses |  |                         | 476  |      |   | 265 |  
|                          |  |                         |      |      |   |     |  
|                          |  |                         |      |      |   |     |  
|Ending balance            |  | $                       | 692  |      | $ | 974 |  
|                          |  |                         |      |      |   |     |  

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

|                                             |  |   |       | 
|-------------------------------------------- |  | - | ----- | 
|Average investment in impaired loans         |  | $ | 1,581 | 
|                                             |  |   |       | 
|                                             |  |   |       | 
|Interest income recognized on impaired loans |  | $ | 39    | 
|                                             |  |   |       | 
|                                             |  |   |       | 
|Interest income received on impaired loans   |  | $ | 39    | 
|                                             |  |   |       | 

| |                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December 31, 2006, 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 (in thousands):

|                                                            |  |   |     | 
|----------------------------------------------------------- |  | - | --- | 
|Nonaccrual loans                                            |  | $ | 245 | 
|                                                            |  |   |     | 
|                                                            |  |   |     | 
|Past due ninety days or
  more, but still accruing interest |  | $ |    | 
|                                                            |  |   |     | 

|    |                                                              
|--- | -------------------------------------------------------------
|(4) | Premises
  and Equipment                                     
|    |                                                              
|    | A summary of premises and
  equipment follows (in thousands):

|                                               |  |                 |       |      |   |       |  
|---------------------------------------------- |  | --------------- | ----- | ---- | - | ----- | -
|                                               |  | At December 31, |      
|                                               |  |                 |      
|                                               |  | 2007            |       | 2006 |  
|                                               |  |                 |       |      |  
|                                              
|Land                                           |  | $               | 1,171 |      | $ | 1,371 |  
|Buildings and improvements                     |  |                 | 1,940 |      |   | 2,336 |  
|Furniture, fixtures and
  equipment            |  |                 | 987   |      |   | 896   |  
|Leasehold improvements                         |  |                 | 114   |      |   | 111   |  
|                                               |  |                 |       |      |   |       |  
|                                               |  |                 |       |      |   |       |  
|Total, at cost                                 |  |                 | 4,212 |      |   | 4,714 |  
|                                               |  |                 |       |      |   |       |  
|Less accumulated depreciation and
amortization |  |                 | (963  | )    |   | (724  | )
|                                               |  |                 |       |      |   |       |  
|                                               |  |                 |       |      |   |       |  
|Premises and equipment, net                    |  | $               | 3,249 |      | $ | 3,990 |  
|                                               |  |                 |       |      |   |       |  

(continued)

F-17

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements, Continued

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Premises
  and Equipment, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | On February 1, 2007, the
  Company entered into a sale/leaseback transaction for its Galt Ocean Mile
  branch facility. No gain or loss was recognized on this transaction.                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The Company
  currently leases two branch facilities under operating leases. One lease
  contains renewal options and requires the Company to pay an allowable share
  of common area maintenance and real estate taxes. The other lease only
  requires the Company to pay real estate taxes. Rent expense under operating
  leases during the years ended December 31, 2007 and 2006 was $119,000 and
  $70,000 respectively. At December 31, 2007, the future minimum lease payments
  are approximately as follows (in thousands):

|            |  |        |     |  | 
|----------- |  | ------ | --- |  | 
|Year Ending |  | Amount |    
|            |  |        |     | 
|           
|2008        |  | $      | 130 | 
|2009        |  |        | 130 | 
|2010        |  |        | 130 | 
|2011        |  |        | 130 | 
|2012        |  |        | 81  | 
|Thereafter  |  |        | 70  | 
|            |  |        |     | 
|            |  |        |     | 
|            |  | $      | 671 | 
|            |  |        |     | 

|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(5) | Deposits                                                                                                                                                                           
|    |                                                                                                                                                                                    
|    | The
  aggregate amount of time deposits with a minimum denomination of $100,000,
  was approximately $38.9 million and $40.9 million at December 31, 2007 and
  2006, respectively.
|    |                                                                                                                                                                                    
|    | A schedule of maturities
  of time deposits at December 31, 2007 follows (in thousands):                                                                                           

|                             |  |        |        |  | 
|---------------------------- |  | ------ | ------ |  | 
|Year
  Ending
  December 31, |  | Amount |       
|                             |  |        |        | 
|                            
|2008                         |  | $      | 78,100 | 
|2009                         |  |        | 10,961 | 
|2010                         |  |        | 5,555  | 
|2011                         |  |        | 801    | 
|2012                         |  |        | 111    | 
|                             |  |        |        | 
|                             |  |        |        | 
|                             |  | $      | 95,528 | 
|                             |  |        |        | 

(continued)

F-18

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(6) | Federal Home
Loan Bank Advances and Junior Subordinated Debenture                                                         
|    |                                                                                                                           
|    | The
 maturities and interest rates on the Federal Home Loan Bank (FHLB) advances
 were as follows(dollars in thousands):

|                                    |  |  |            |      |                |      |                 |   |        |  |   |        |  | 
|----------------------------------- |  |  | ---------- | ---- | -------------- | ---- | --------------- | - | ------ |  | - | ------ |  | 
|Maturity
 Year Ending
 December 31, |  |  | Call
 Date |      | Interest
 Rate |      | At December 31, |  
|                                    |  |  |            |      |               
|                                    |  |  |            | 2007 |                | 2006 |                
|                                    |  |  |            |      |                |      |                 |   |        | 
|                                    |  |  |            |      |                |      |                 |   |        | 
|Daily                               |  |  |           |      |                | 4.40 | % (a)           | $ | 700    |  | $ | 2,500  | 
|2007                                |  |  |           |      |                | 3.48 |                 |   |       |  |   | 2,500  | 
|2007                                |  |  |           |      |                | 3.70 |                 |   |       |  |   | 2,000  | 
|2009                                |  |  |           |      |                | 4.92 |                 |   | 1,000  |  |   | 1,000  | 
|2009                                |  |  |           |      |                | 4.99 |                 |   | 5,000  |  |   | 5,000  | 
|2009                                |  |  |           |      |                | 4.95 |                 |   | 5,000  |  |   |       | 
|2012                                |  |  | 2009       |      |                | 4.75 |                 |   | 4,000  |  |   |       | 
|2013                                |  |  | 2008       |      |                | 3.42 |                 |   | 2,000  |  |   | 2,000  | 
|2013                                |  |  | 2008       |      |                | 3.09 |                 |   | 3,000  |  |   | 3,000  | 
|2013                                |  |  | 2008       |      |                | 2.80 |                 |   | 1,950  |  |   | 1,950  | 
|2013                                |  |  | 2008       |      |                | 2.56 |                 |   | 3,000  |  |   | 3,000  | 
|2013                                |  |  | 2008       |      |                | 3.44 |                 |   | 3,000  |  |   | 3,000  | 
|2014                                |  |  | 2007       |      |                | 3.14 |                 |   |       |  |   | 4,000  | 
|2014                                |  |  | 2009       |      |                | 3.64 |                 |   | 8,000  |  |   | 8,000  | 
|2016                                |  |  | 2009       |      |                | 4.51 |                 |   | 5,000  |  |   | 5,000  | 
|2016                                |  |  | 2009       |      |                | 4.65 |                 |   | 8,000  |  |   | 8,000  | 
|2016                                |  |  | 2009       |      |                | 4.44 |                 |   | 5,600  |  |   | 5,600  | 
|2017                                |  |  | 2009       |      |                | 4.38 |                 |   | 1,600  |  |   |       | 
|                                    |  |  |            |      |                |      |                 |   |        |  |   |        | 
|                                    |  |  |            |      |                |      |                 |   |        |  |   |        | 
|                                    |  |  |            |      |                |      |                 | $ | 56,850 |  | $ | 56,550 | 
|                                    |  |  |            |      |                |      |                 |   |        |  |   |        | 
|                                    |  |  |            |      |                |      |                 |   |        |  |   |        | 

|    |               
|--- | --------------
|(a) | Adjusts
 daily

| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Certain of
 the above advances are callable by the FHLB at the dates indicated.                                                                                                                                                                                                                                                                                                                                                             
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | At December
 31, 2007 and 2006, the FHLB advances were collateralized by a blanket lien on
 qualifying residential one-to-four family mortgage loans, commercial and
 multi-family real estate loans and all of the Companys Federal Home Loan
 Bank stock.                                                                                                                                                                                
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | During 2006,
 the Company repaid $15,000,000 of FHLB advances early resulting in a gain of
 $202,000.                                                                                                                                                                                                                                                                                                                                       
| |                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | On September
 30, 2004, the Company issued a $5,155,000 junior subordinated debenture to an
 unconsolidated subsidiary. The debenture has a term of thirty years. The
 interest rate is fixed at 6.4% for the first five years, and thereafter, the
 coupon rate will float quarterly at the three-month LIBOR rate plus 2.45%.
 The junior subordinated debenture, due in 2034, is redeemable in certain circumstances
 after October 2009.

(continued)

F-19

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(7) | Other Borrowings                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                         
|    | Other
 borrowings consist of securities sold under an agreement to
 repurchase. The securities sold under the agreement to repurchase were
 delivered to the broker-dealer who arranged the transactions. Information
 concerning the securities sold under an agreement to repurchase is summarized
 as follows (dollars in thousands):

|                                                   |  |                         |        |      |   |        |  
|-------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ | -
|                                                   |  | Year Ended December 31, |       
|                                                   |  |                         |       
|                                                   |  | 2007                    |        | 2006 |  
|                                                   |  |                         |        |      |  
|                                                  
|Balance at
 year end                               |  | $                       | 28,900 |      | $ | 10,950 |  
|Average
 balance during the year                   |  | $                       | 26,971 |      | $ | 12,756 |  
|Average
 interest rate during the year             |  |                         | 4.72   | %    |   | 4.41   | %
|Maximum
 month-end balance during the year         |  | $                       | 31,900 |      | $ | 12,950 |  
|Securities
 held to maturity pledged as collateral |  | $                       | 33,675 |      | $ | 15,352 |  

| |                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------
| | The
 maturities and interest rates on securities sold under an agreement to
 repurchase are as follows(dollars in thousands):

|                                   |  |                |      |      |   |                 |  |   |        |  | 
|---------------------------------- |  | -------------- | ---- | ---- | - | --------------- |  | - | ------ |  | 
|Maturing
 Year Ended
 December 31, |  |                |      |      |   | At December 31, | 
|                                   |  | Interest
 Rate |      | 2007 |   | 2006            | 
|                                   |  |                |      |      |   |                 |  |  
|                                   |  |                |      |      |   |                 |  |   |        | 
|2007                               |  |                | 4.02 | %    | $ |                |  | $ | 5,350  | 
|2007                               |  |                | 4.85 | %    |   |                |  |   | 3,000  | 
|2007                               |  |                | 5.32 | %    |   |                |  |   | 2,600  | 
|2012                               |  |                | 4.60 | %    |   | 6,000           |  |   |       | 
|2012                               |  |                | 4.63 | %    |   | 4,500           |  |   |       | 
|2012                               |  |                | 4.69 | %    |   | 8,000           |  |   |       | 
|2012                               |  |                | 4.71 | %    |   | 4,600           |  |   |       | 
|2012                               |  |                | 4.64 | %    |   | 5,800           |  |   |       | 
|                                   |  |                |      |      |   |                 |  |   |        | 
|                                   |  |                |      |      |   |                 |  |   |        | 
|                                   |  |                |      |      | $ | 28,900          |  | $ | 10,950 | 
|                                   |  |                |      |      |   |                 |  |   |        | 

| |                                                                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December
 31, 2007, the Company also had $6 million available under a line of credit
 with its correspondent bank. There were no amounts outstanding in connection
 with this agreement at December 31, 2007.

(continued)

F-20

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                   
|--- | --------------------------------------------------------------------------------------------------
|(8) | Financial Instruments                                                                             
|   
|    | The
 estimated fair values of the Companys financial instruments were as follows
 (in thousands):

|                                        |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|--------------------------------------- |  | -------------------- | ------- | -------------------- | - | ---------------- |  | ----------- | ------- |  | - | ------- | 
|                                        |  | At December 31, 2007 |         | At December 31, 2006 |  
|                                        |  |                      |         |                      |  
|                                        |  | Carrying
 Amount     |         | Fair
 Value          |   | Carrying
 Amount |  | Fair
 Value |        
|                                        |  |                      |         |                      |  
|                                        |  |                      |         |                      |   |                  |  |             |        
|Financial assets:                       |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Cash and cash equivalents               |  | $                    | 701     |                      | $ | 701              |  | $           | 1,604   |  | $ | 1,604   | 
|Securities held to maturity             |  |                      | 58,471  |                      |   | 58,117           |  |             | 33,399  |  |   | 33,150  | 
|Security available for sale             |  |                      | 244     |                      |   | 244              |  |             | 241     |  |   | 241     | 
|Loans                                   |  |                      | 173,323 |                      |   | 172,860          |  |             | 181,878 |  |   | 181,688 | 
|Federal Home Loan Bank stock            |  |                      | 2,965   |                      |   | 2,965            |  |             | 2,956   |  |   | 2,956   | 
|Accrued interest receivable             |  |                      | 1,448   |                      |   | 1,448            |  |             | 1,254   |  |   | 1,254   | 
|                                        |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Financial liabilities:                  |  |                      |         |                      |   |                  |  |             |         |  |   |         | 
|Deposit liabilities                     |  |                      | 125,034 |                      |   | 125,134          |  |             | 129,502 |  |   | 129,059 | 
|Federal Home Loan Bank advances         |  |                      | 56,850  |                      |   | 56,346           |  |             | 56,550  |  |   | 54,178  | 
|Other borrowings                        |  |                      | 28,900  |                      |   | 29,317           |  |             | 10,950  |  |   | 10,887  | 
|Junior subordinated debenture           |  |                      | 5,155   |                      |   | 5,083            |  |             | 5,155   |  |   | 5,086   | 
|Off-balance sheet financial instruments |  |                      |        |                      |   |                 |  |             |        |  |   |        | 

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company
 is party to financial instruments with off-balance-sheet risk in the normal
 course of business to meet the financing needs of its customers. These
 financial instruments are commitments to extend credit and may involve, to
 varying degrees, elements of credit and interest-rate risk in excess of the
 amount recognized in the consolidated balance sheet. The contract amounts of
 these instruments reflect the extent of involvement the Company has in these
 financial instruments.                                                                                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | The
 Companys exposure to credit loss in the event of nonperformance by the other
 party to the financial instrument for commitments to extend credit is
 represented by the contractual amount of those instruments. The Company uses
 the same credit policies in making commitments as it does for
 on-balance-sheet instruments.                                                                                                                                                                                                                                                                                                                                                            
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Commitments
 to extend credit are agreements to lend to a customer as long as there is no
 violation of any condition established in the contract. Commitments generally
 have fixed expiration dates or other termination clauses and may require
 payment of a fee. Because some of the commitments are expected to expire
 without being drawn upon, the total commitment amounts do not necessarily
 represent future cash requirements. The Company evaluates each customers
 credit worthiness on a case-by-case basis. The amount of collateral obtained,
 if deemed necessary by the Company, upon extension of credit, is based on
 managements credit evaluation of the counterparty.

(continued)

F-21

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|    |                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(8) | Financial Instruments, Continued                                                                                                                                                                                                           
|   
|    | Commitments
 to extend credit typically result in loans with a market interest rate when
 funded. A summary of the amounts of the Companys financial instruments with
 off-balance-sheet risk at December 31, 2007 follows (in thousands):

|                              |  |                  |       | 
|----------------------------- |  | ---------------- | ----- | 
|                              |  | Contract
 Amount |      
|                              |  |                 
|                              |  |                  |      
|                             
|Undisbursed
 loans in process |  | $                | 250   | 
|                              |  |                  |       | 
|                              |  |                  |       | 
|Commitments
 to extend credit |  | $                | 6,665 | 
|                              |  |                  |       | 

|     |                                                                                                                                                                                                                                                                                                                                                                      
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(9)  | Credit Risk                                                                                                                                                                                                                                                                                                                                                          
|    
|     | The Company
 grants the majority of its loans to borrowers throughout Broward and portions
 of Palm Beach and Miami-Dade Counties, Florida. Although the Company has a
 diversified loan portfolio, a significant portion of its borrowers ability
 to honor their contracts is dependent upon the economy in Broward, Palm Beach
 and Miami-Dade Counties, Florida.
|     |                                                                                                                                                                                                                                                                                                                                                                      
|(10) | Income Taxes                                                                                                                                                                                                                                                                                                                                                         
|    
|     | Income taxes
 consisted of the following (in thousands):                                                                                                                                                                                                                                                                                                             

|               |  |                         |       |      |   |       |  
|-------------- |  | ----------------------- | ----- | ---- | - | ----- | -
|               |  | Year Ended December 31, |      
|               |  |                         |      
|               |  | 2007                    |       | 2006 |  
|               |  |                         |       |      |  
|Current:       |  |                         |       |      |   |       |  
|Federal        |  | $                       | 866   |      | $ | 1,041 |  
|State          |  |                         | 150   |      |   | 180   |  
|               |  |                         |       |      |   |       |  
|               |  |                         |       |      |   |       |  
|Total current  |  |                         | 1,016 |      |   | 1,221 |  
|               |  |                         |       |      |   |       |  
|               |  |                         |       |      |   |       |  
|Deferred:      |  |                         |       |      |   |       |  
|Federal        |  |                         | (10   | )    |   | (118  | )
|State          |  |                         | (3    | )    |   | (20   | )
|               |  |                         |       |      |   |       |  
|               |  |                         |       |      |   |       |  
|Total deferred |  |                         | (13   | )    |   | (138  | )
|               |  |                         |       |      |   |       |  
|               |  |                         |       |      |   |       |  
|Total          |  | $                       | 1,003 |      | $ | 1,083 |  
|               |  |                         |       |      |   |       |  

(continued)

F-22

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated
Financial Statements, Continued

|     |                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Income Taxes, Continued                                                                                                                                       
|     |                                                                                                                                                               
|     | The reasons
  for the differences between the statutory Federal income tax rate and the
  effective tax rate are summarized as follows (dollars in thousands):

| |                                         |  |                           |       |          |        |        |   |          |       |        |  |      |  
| | --------------------------------------- |  | ------------------------- | ----- | -------- | ------ | ------ | - | -------- | ----- | ------ |  | ---- | -
| |                                         |  | Year Ended
  December 31, |      
| |                                         |  |                           |      
| |                                         |  | 2007                      |       | 2006     |       
| |                                         |  |                           |       |          |       
| |                                         |  |                           |       |          | % of   |        |   |          |       | % of   | 
| |                                         |  |                           |       |          | Pretax |        |   |          |       | Pretax | 
| |                                         |  | Amount                    |       | Earnings |        | Amount |   | Earnings |      
| |                                         |  |                           |       |          |        |        |   |          |      
|
| | Income taxes
  at statutory rate        |  | $                         | 933   |          |        | 34.0   | % | $        | 992   |        |  | 34.0 | %
| | Increase
  (decrease) resulting from:   |  |                           |       |          |        |        |   |          |       |        |  |      |  
| | State taxes, net of Federal tax benefit |  |                           | 97    |          |        | 3.5    |   |          | 106   |        |  | 3.6  |  
| | Other                                   |  |                           | (27   | )        |        | (1.0   | ) |          | (15   | )      |  | (.5  | )
| |                                         |  |                           |       |          |        |        |   |          |       |        |  |      |  
|
| |                                         |  | $                         | 1,003 |          |        | 36.5   | % | $        | 1,083 |        |  | 37.1 | %
| |                                         |  |                           |       |          |        |        |   |          |       |        |  |      |  

| |                                                                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The tax
  effects of temporary differences that give rise to significant portions of
  the deferred tax assets and deferred tax liabilities are presented below (in
  thousands).

| |                                                  |  |                   |      |      |   |      |  
| | ------------------------------------------------ |  | ----------------- | ---- | ---- | - | ---- | -
| |                                                  |  | At
  December 31, |     
| |                                                  |  |                   |     
| |                                                  |  | 2007              |      | 2006 |  
| |                                                  |  |                   |      |      |  
| | Deferred tax
  assets:                           |  |                   |      |      |   |      |  
| | Allowance for loan losses                        |  | $                 | 186  |      | $ | 282  |  
| | Unrealized loss on security available for
  sale |  |                   | 2    |      |   |     |  
| |                                                  |  |                   |      |      |   |      |  
|
| | Deferred tax assets                              |  |                   | 188  |      |   | 282  |  
| |                                                  |  |                   |      |      |   |      |  
|
| | Deferred tax
  liabilities:                      |  |                   |      |      |   |      |  
| | Loan costs                                       |  |                   | (39  | )    |   | (49  | )
| | Accrual to cash adjustment                       |  |                   | (62  | )    |   | (123 | )
| | Premises and equipment                           |  |                   | (104 | )    |   | (142 | )
| | Other                                            |  |                   | (17  | )    |   | (17  | )
| |                                                  |  |                   |      |      |   |      |  
|
| | Deferred tax liabilities                         |  |                   | (222 | )    |   | (331 | )
| |                                                  |  |                   |      |      |   |      |  
|
| | Net deferred income tax liability                |  | $                 | (34  | )    | $ | (49  | )
| |                                                  |  |                   |      |      |   |      |  

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Related Party Transactions                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | The Company
  has entered into transactions with its executive officers, directors and
  their affiliates in the ordinary course of business. There were loans to
  related parties at December 31, 2007 and 2006 of approximately $3,810,000 and
  $2,243,000, respectively. At December 31, 2007 and 2006, these same related
  parties had approximately $1,436,000 and $1,931,000, respectively, on deposit
  with the Company.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     | (continued)                                                                                                                                                                                                                                                                                                                                                                                                                        

F-23

---



OPTIMUMBANK
HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated
Financial Statements, Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | Stock-Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     | The Company
  established an Incentive Stock Option Plan (the Plan) for officers,
  directors and employees of the Company and reserved 544,840 (amended) shares
  of common stock for the plan. Both incentive stock options and nonqualified
  stock options may be granted under the plan. The exercise price of the stock
  options is determined by the board of directors at the time of grant, but
  cannot be less than the fair market value of the common stock on the date of
  grant. The options vest ­­over three and five years. However, the Companys
  board of directors authorized the immediate vesting of all stock options
  outstanding as of December 29, 2005 in order to reduce noncash compensation
  expense that would have been recorded in its consolidated statements of
  earnings in future years upon adoption of SFAS 123(R) in January 2006. The
  options must be exercised within ten years from the date of grant. At
  December 31, 2007, 13,561 options were available for grant.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|     | A summary of
  the activity in the Companys stock option plan is as follows. All option
  amounts reflect the 5% stock dividends declared in May 2007 and April 2006. The
  Board of Directors did not adjust the exercise price of the stock options
  outstanding to reflect the 5% stock dividends (dollars in thousands, except
  share amounts):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                    |  |           |         |          |           |             |           |           |           |  |   |     | 
| | ---------------------------------- |  | --------- | ------- | -------- | --------- | ----------- | --------- | --------- | --------- |  | - | --- | 
| |                                    |  |           |         |          |           |             |           | Weighted- |           |  |   |    
| |                                    |  |           |         |          | Weighted- |             | Average   |           |           |  |  
| |                                    |  |           |         |          | Average   |             | Remaining |           | Aggregate | 
| |                                    |  | Number of |         | Exercise |           | Contractual |           | Intrinsic |          
| |                                    |  | Options   |         | Price    |           | Term        |           | Value     |          
| |                                    |  |           |         |          |           |             |           |           |          
|
| | Outstanding
  at December 31, 2005 |  |           | 521,484 |          | $         | 7.98        |           |           |           |  |   |     | 
| | Exercised                          |  |           | (21,150 | )        |           | 6.45        |           |           |           |  |   |     | 
| | Forfeited                          |  |           | (9,702  | )        |           | 9.67        |           |           |           |  |   |     | 
| |                                    |  |           |         |          |           |             |           |           |           |  |   |     | 
| |                                    |  |           |         |          |           |             |           |           |           |  |   |     | 
| | Outstanding
  at December 31, 2006 |  |           | 490,632 |          |           | 8.04        |           |           |           |  |   |     | 
| | Exercised                          |  |           | (7,166  | )        |           | 5.67        |           |           |           |  |   |     | 
| | Forfeited                          |  |           | (3,859  | )        |           | 10.00       |           |           |           |  |   |     | 
| |                                    |  |           |         |          |           |             |           |           |           |  |   |     | 
|
| | Outstanding
  and exercisable at   |  |           |         |          |           |             |           |           |           |  |   |     | 
| | December 31, 2007                  |  |           | 479,607 |          | $         | 8.06        |           |           | 5.7 years |  | $ | 226 | 
| |                                    |  |           |         |          |           |             |           |           |           |  |   |     | 

| |                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The total
  intrinsic value of options exercised during the years ended December 31, 2007
  and 2006 was $16,675 and $106,734, respectively, and the tax benefit relating
  to the stock options exercised in 2006 was $37,000. There was no tax benefit
  recognized in 2007.
| |                                                                                                                                                                                                                                                                               
| | (continued)                                                                                                                                                                                                                                                                   

F-24

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(12) | Stock-Based Compensation, Continued                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Effective
 January 1, 2002, the Board of Directors adopted a nonemployee director
 compensation and stock purchase plan under which each outside director is
 required to purchase Company stock with compensation for board meetings at a
 price no less than fair market value. A total of 15,941 shares (as adjusted
 to reflect the 5% stock dividends declared in May 2007 and April 2006) have
 been authorized for issuance to outside directors under this plan. A total of
 4,172 and 1,277 shares of common stock were issued to outside directors under
 this plan during the years ended December 31, 2007 and 2006, respectively. A
 total of 5,300 shares were available for issuance at December 31, 2007. This
 plan was terminated effective January 1, 2008.                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|(13) | Regulatory Matters                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | The Bank is
 subject to various regulatory capital requirements administered by the
 regulatory banking agencies. Failure to meet minimum capital requirements can
 initiate certain mandatory and possibly additional discretionary actions by
 regulators that, if undertaken, could have a direct material effect on the
 Companys and Banks financial statements. Under capital adequacy guidelines
 and the regulatory framework for prompt corrective action, the Bank must meet
 specific capital guidelines that involve quantitative measures of their
 assets, liabilities, and certain off-balance-sheet items as calculated under regulatory
 accounting practices. The capital amounts and classification are also subject
 to qualitative judgments by the regulators about components, risk weightings,
 and other factors.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | Quantitative
 measures established by regulation to ensure capital adequacy require the
 Bank to maintain minimum amounts and percentages (set forth in the following
 table) of total and Tier 1 capital (as defined in the regulations) to
 risk-weighted assets (as defined) and of Tier 1 capital (as defined) to
 average assets (as defined). Management believes, as of December 31, 2007,
 the Bank met all capital adequacy requirements to which they are subject.                                                                                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|     | As of
 December 31, 2007, the most recent notification from the regulatory
 authorities categorized the 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 the Banks category. The Banks actual
 capital amounts and percentages are also presented in the table (dollars in
 thousands).                                                                                                                                                                                                                  

|                                       |  |        |        |                              |  |                                                                              |   |   |        |        |  |      |   |   |        |  |  |       |  
|-------------------------------------- |  | ------ | ------ | ---------------------------- |  | ---------------------------------------------------------------------------- | - | - | ------ | ------ |  | ---- | - | - | ------ |  |  | ----- | -
|                                       |  | Actual |        | For Capital AdequacyPurposes |  | 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  |  

(continued)

F-25

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                              
|---- | -----------------------------
|(13) | Regulatory Matters, Continued

|                                       |  |        |        |                                 |  |                                                                                  |       |  |        |  |        |   |  |  |        |  |  |   |        |  |  |  |       |  | 
|-------------------------------------- |  | ------ | ------ | ------------------------------- |  | -------------------------------------------------------------------------------- | ----- |  | ------ |  | ------ | - |  |  | ------ |  |  | - | ------ |  |  |  | ----- |  | 
|                                       |  | Actual |        | For Capital Adequacy
  Purposes |  | Minimum
  To Be Well
  Capitalized Under
  Prompt Corrective
  Action Provisions |      
|                                       |  |        |        |                                 |  |                                                                                  |      
|                                       |  |        | Amount |                                 |  | %                                                                                |       |  | Amount |  |        | % |  |  | Amount |  |  | % |       
|                                       |  |        |        |                                 |  |                                                                                  |       |  |        |  |        |   |  |  |        | 
|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  |  | 

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(14) | Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | The Company is limited in the amount of cash dividends that may be
  paid. Banking regulations place certain restrictions on dividends and loans
  or advances made by the Bank to the Holding Company. The amount of cash
  dividends that may be paid by the Bank to the Holding Company is based on the
  Banks net earnings of the current year combined with the Banks retained
  earnings of the preceding two years, as defined by state banking regulations.
  However, for any dividend declaration, the Company must consider additional
  factors such as the amount of current period net earnings, liquidity, asset
  quality, capital adequacy and economic conditions. It is likely that these
  factors would further limit the amount of dividend which the Company could
  declare. In addition, bank regulators have the authority to prohibit banks
  from paying dividends if they deem such payment to be an unsafe or unsound
  practice.
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(15) | Contingencies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | Various claims also arise from time to time in the normal course of
  business. In the opinion of management, none have occurred that will have a
  material effect on the Companys consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(16) | Simple IRA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|     | The Company has a Simple IRA Plan whereby substantially all employees
  participate in the Plan. Employees may contribute up to 15 percent of their
  compensation subject to certain limits based on federal tax laws. The Company
  makes matching contributions equal to the first 3% of an employees
  compensation contributed to the Plan. Matching contributions vest to the
  employee immediately. For the years ended December 31, 2007 and 2006, expense
  attributable to the Plan amounted to $42,333 and $42,205, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                    

(continued)

F-26

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes
to Consolidated Financial Statements, Continued

|     |                                                                                                                                                   
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|(17) | Holding Company Financial Information                                                                                                             
|     |                                                                                                                                                   
|     | The Holding
 Companys unconsolidated financial information as of December 31, 2007 and
 2006 and for the years then ended follows (in thousands):

Condensed
Balance Sheets

|                                           |  |                          |        |      |   |        |  
|------------------------------------------ |  | ------------------------ | ------ | ---- | - | ------ | -
|                                           |  | At
 December 31,         |       
|                                           |  |                          |       
|                                           |  | 2007                     |        | 2006 |  
|                                           |  |                          |        |      |  
|Assets                                     |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |  
|Cash                                       |  | $                        | 13     |      | $ | 75     |  
|Investment in subsidiary                   |  |                          | 27,270 |      |   | 25,351 |  
|Other assets                               |  |                          | 218    |      |   | 255    |  
|                                           |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |   |        |  
|Total assets                               |  | $                        | 27,501 |      | $ | 25,681 |  
|                                           |  |                          |        |      |   |        |  
|                                          
|Liabilities and Stockholders Equity       |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |   |        |  
|Other liabilities                          |  | $                        | 99     |      | $ | 103    |  
|Junior subordinated debenture              |  |                          | 5,155  |      |   | 5,155  |  
|Stockholders equity                       |  |                          | 22,247 |      |   | 20,423 |  
|                                           |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |   |        |  
|Total liabilities and stockholders equity |  | $                        | 27,501 |      | $ | 25,681 |  
|                                           |  |                          |        |      |   |        |  
|Condensed Statements of Earnings          
|                                           |  |                          |        |      |   |        |  
|                                           |  | Year Ended
 December 31, |       
|                                           |  |                          |       
|                                           |  | 2007                     |        | 2006 |  
|                                           |  |                          |        |      |  
|                                           |  |                          |        |      |   |        |  
|Earnings of subsidiary                     |  | $                        | 2,011  |      | $ | 2,102  |  
|Interest expense                           |  |                          | (320   | )    |   | (320   | )
|Other expense                              |  |                          | (111   | )    |   | (109   | )
|                                           |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |   |        |  
|Earnings before income tax benefit         |  |                          | 1,580  |      |   | 1,673  |  
|                                           |  |                          |        |      |   |        |  
|Income tax benefit                         |  |                          | (162   | )    |   | (161   | )
|                                           |  |                          |        |      |   |        |  
|                                           |  |                          |        |      |   |        |  
|Net earnings                               |  | $                        | 1,742  |      | $ | 1,834  |  
|                                           |  |                          |        |      |   |        |  

(continued)

F-27

---



OPTIMUMBANK HOLDINGS, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements,
Continued

|     |                                                 
|---- | ------------------------------------------------
|(17) | Holding
Company Financial Information, Continued

Condensed Statements of Cash Flows

|                                                                                                                                               |  |                         |        |      |   |        |  
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ------ | -
|                                                                                                                                               |  | Year Ended December 31, |       
|                                                                                                                                               |  |                         |       
|                                                                                                                                               |  | 2007                    |        | 2006 |  
|                                                                                                                                               |  |                         |        |      |  
|Cash flows from operating activities:                                                                                                          |  |                         |        |      |   |        |  
|Net earnings                                                                                                                                   |  | $                       | 1,742  |      | $ | 1,834  |  
|Adjustments to reconcile net earnings to
  net cash  (used in) provided by
  operating activities:                                             |  |                         |        |      |   |        |  
|Equity in undistributed earnings of
  subsidiary                                                                                               |  |                         | (2,011 | )    |   | (2,102 | )
|Decrease in other assets                                                                                                                       |  |                         | 37     |      |   | 264    |  
|(Decrease) increase in accrued other
  liabilities                                                                                             |  |                         | (4     | )    |   | 7      |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Net cash (used in) provided by operating
  activities                                                                                          |  |                         | (236   | )    |   | 3      |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|Cash flow from investing activities:                                                                                                           |  |                         |        |      |   |        |  
|Dividend from subsidiary                                                                                                                       |  |                         | 175    |      |   |       |  
|Investment in subsidiary                                                                                                                       |  |                         | (78    | )    |   | (144   | )
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Net cash provided by (used in) investing
  activities                                                                                          |  |                         | 97     |      |   | (144   | )
|                                                                                                                                               |  |                         |        |      |   |        |  
|Cash flows from financing activities:                                                                                                          |  |                         |        |      |   |        |  
|Proceeds from sale of common stock                                                                                                             |  |                         | 37     |      |   | 14     |  
|Proceeds from exercise of common stock
  options                                                                                               |  |                         | 41     |      |   | 130    |  
|Tax benefit associated with exercise of
  stock options                                                                                        |  |                         |       |      |   | 37     |  
|Fractional shares of stock dividend paid in
  cash                                                                                             |  |                         | (1     | )    |   |       |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Net cash provided by financing activities                                                                                                      |  |                         | 77     |      |   | 181    |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Net (decrease) increase in cash                                                                                                                |  |                         | (62    | )    |   | 40     |  
|                                                                                                                                              
|Cash at beginning of the year                                                                                                                  |  |                         | 75     |      |   | 35     |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Cash at end of year                                                                                                                            |  | $                       | 13     |      | $ | 75     |  
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Noncash transactions:                                                                                                                          |  |                         |        |      |   |        |  
|Change in accumulated other comprehensive
  loss of  subsidiary, net change in
  unrealized loss on security  available
  for sale, net of tax |  | $                       | 5      |      | $ | (2     | )
|                                                                                                                                               |  |                         |        |      |   |        |  
|                                                                                                                                              
|Common stock dividend                                                                                                                          |  | $                       | 1,302  |      | $ | 1,609  |  
|                                                                                                                                               |  |                         |        |      |   |        |  

F-28

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