##### Table of Contents





SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549





FORM 10-K







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

For the Fiscal Year Ended December 31, 2009

OR



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

Commission File Number 000-50755





OPTIMUMBANK
HOLDINGS, INC.

(Name of registrant as specified in its charter)







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

Issuers telephone number, including area code:

(954) 776-2332

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $0.01 per share

Securities registered pursuant to Section 12(g) of the Act:

None





The registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES   ̈    NO  x

The registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    YES   ̈    NO  x

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

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

Indicate by check mark if the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of
the Exchange Act. (Check one):



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  |  ̈ |  | Smaller reporting company |  | x

The registrant is a shell company, as defined in Rule 12b-2 of the Exchange
Act.    YES   ̈    NO  x

The aggregate market value of the Common Stock of the issuer held by non-affiliates of the issuer (2,466,750 shares) on April 12,
2010, was approximately $1,973,400. The aggregate market value was computed by reference to the closing market price of the Common Stock of the issuer at $.80 per share on April 12, 2010. For the purposes of this response, directors and
executive officers are considered the affiliates of the issuer at that date.

As of April 12, 2010, there were issued and
outstanding 3,276,842 shares of the issuers Common Stock.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be held on June 3, 2010 to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A within 120 days of the issuers fiscal year end are incorporated by reference into Part III, Items 9 through 12, and 14, of this Annual Report on Form 10-K.









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TABLE OF CONTENTS



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



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##### Table of Contents

PART I



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

Forward-Looking Statements

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



| |  |  | general economic conditions, either nationally or regionally, that are less favorable than expected resulting in, among other things, a deterioration
in credit quality and an increase in credit risk-related losses and expenses;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in the interest rate environment that reduce margins;
| | - |  | -------------------------------------------------------------



| |  |  | competitive pressure in the banking industry that increases significantly;
| | - |  | --------------------------------------------------------------------------



| |  |  | changes that occur in the regulatory environment; and
| | - |  | -----------------------------------------------------



| |  |  | changes that occur in business conditions and the rate of inflation.
| | - |  | --------------------------------------------------------------------

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

General

OptimumBank Holdings, Inc. was formed in 2004 as a Florida corporation that holds all the outstanding shares of OptimumBank. Our only
business is the ownership and operation of OptimumBank, a Florida chartered bank. OptimumBank commenced operations in November 2000, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC. OptimumBank provides community
banking services to individuals and businesses in Broward, Miami-Dade and Palm Beach counties. OptimumBank conducts operations from its Fort Lauderdale headquarters and three branch offices in Fort Lauderdale, Plantation and Deerfield Beach. The
Banks wholly-owned subsidiaries are OB Real Estate Management, LLC, OB Real Estate Holdings, LLC and OB Real Estate Holdings 1503, LLC, all of which were formed in 2009. OB Real Estate Management, LLC is engaged in managing foreclosed real
estate , but had no activity in 2009. OB Real Estate Holdings, LLC and OB Real Estate Holdings 1503, LLC are engaged in holding and disposing of foreclosed real estate.

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

At December 31, 2009, our company had total assets of $270.0 million, net loans of $134.1 million, total deposits of $151.7 million
and stockholders equity of $11.3 million. During 2009, our company had a net loss of $(11.5) million.

Banking Products

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

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



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

Lending Activities

We offer primarily real estate and to a lesser extent, consumer loans, to individuals and small businesses and other organizations that
are located in or conduct a substantial portion of their business in our market area. Our market area consists of the tri-county area of Broward, Miami-Dade and Palm Beach counties. Our net loans at December 31, 2009 were $134.1 million, or
49.67% of total assets. The interest rates we charge on loans vary with the degree of risk, maturity, and amount of the loan, and are further subject to competitive pressures, money market rates, availability of funds, and government regulations. We
have no foreign loans or loans for highly leveraged transactions.

Our loans are concentrated in two major areas: residential
and commercial real estate loans. As of December 31, 2009, 99.41% of our loan portfolio consisted of loans secured by mortgages on real estate, of which approximately 38.99% of the total loan portfolio was secured by one-to-four family
residential properties. Our real estate loans are located primarily in our tri-county market area.

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

Our loan originations have been derived primarily from independent mortgage brokers that process our loans. We pay fees to
these brokers in connection with their services; however, we perform the underwriting and approval of each of the loans we fund. Loan originations have also been derived from existing customers, and referrals from existing customers and Bank
employees.

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

Deposit Activities

Deposits are the major source of our funds for lending and other investment activities. We consider the majority of our
regular savings, demand, NOW, money market deposit accounts and CDs under $100,000 to be core deposits. These accounts comprised approximately 65.3% of our total deposits at December 31, 2009. Approximately 70.7% of our deposits at
December 31, 2009 were certificates of deposit. Generally, we attempt to maintain the rates paid on our deposits at a competitive level. Time deposits of $100,000 and over made up approximately 34.7% of our total deposits at December 31,
2009.Although these large deposits are not traditionally considered core deposits, the majority of these deposits have served as a stable source of funds in our targeted market. The majority of our deposits are generated from Broward County.

We have used brokered deposits to facilitate the funding of our mortgage lending activities in circumstances when larger than
anticipated loan volumes occur and there is not enough time to fund the additional loan demand through traditional deposit solicitation. The time frame from the initial order to the final funding of brokered deposits is generally one to three days.
The rates paid on these brokered deposits are typically equal to or slightly less than the high end of the interest rates in OptimumBanks competitive market area. Starting in December 2009, we reduced our reliance on brokered deposits by no
longer soliciting or renewing existing brokered deposits. Brokered deposits amounted to 9.2% and 11.9% of our total deposits at December 31, 2009 and 2008, respectively.



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Investments

Our investment securities portfolio was approximately $ 81.1 million and $82.5 million at December 31, 2009 and 2008,
respectively, representing 30.0 % and 32.3 % of our total assets. At December 31, 2009, approximately 43.5 % of this portfolio was invested in U.S. government agency mortgage backed securities (MBS)
and 56.5 % of this portfolio was invested in private label MBS. Mortgage backed securities generally have a shorter life than the stated maturity. Our investments are managed in relation to loan demand and deposit growth, and are
generally used to provide for the investment of excess funds at acceptable risks levels while providing liquidity to fund increases in loan demand or to offset fluctuations in deposits.

Federal funds sold is the excess cash we have available over and above daily cash needs. This money is invested on an overnight basis
with approved correspondent banks.

Correspondent Banking

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

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

Data Processing

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

Internet Banking

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

Competition

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

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

Employees

As of December 31, 2009, we had sixteen full-time employees, including executive officers. The employees are not represented by a
collective bargaining unit. We consider relations with employees to be good.



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Supervision and Regulation

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

Company Regulation

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

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

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

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



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

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

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

Bank Regulation

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

Capital Adequacy Requirements. Banks are required to maintain
capital at adequate levels based on a percentage of assets and off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. Under the risk-based standard, capital is classified into two tiers. Tier 1 capital consists of common
shareholders equity (excluding the unrealized gain (loss) on available-for-sale securities), trust preferred securities subject to certain limitations, and minus certain intangible assets. Tier 2 capital consists of the general allowance for
credit losses except for certain limitations. An institutions qualifying capital base for purposes of its risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital. The regulatory minimum requirements are 4% for Tier 1 and
8% for total risk-based capital. At December 31, 2009, our Tier 1 and total risk-based capital ratios were 8.93% and 10.23%, respectively.

Banks are also required to maintain capital at a minimum level based on total assets, which is known as the leverage ratio. The minimum
requirement for the leverage ratio is 4%, but all but the highest rated institutions are required to maintain ratios 100 to 200 basis points above the minimum. At December 31, 2009, our leverage ratio was 5.85%.

The FDIC Improvement Act of 1993 (FDICIA) contains prompt corrective action provisions pursuant to which banks
are to be classified into one of five categories based upon capital adequacy, ranging from well capitalized to critically undercapitalized and which require (subject to certain exceptions) the appropriate federal banking
agency to take prompt corrective action with respect to an institution which becomes significantly undercapitalized or critically undercapitalized.



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The FDIC has issued regulations to implement the prompt corrective action
provisions of FDICIA. In general, the regulations define the five capital categories as follows:



| |  |  | an institution is well capitalized if it has a total risk-based capital ratio of 10% or greater, has a Tier 1 risk-based capital ratio of
6% or greater, has a leverage ratio of 5% or greater and is not subject to any written capital order or directive to meet and maintain a specific capital level for any capital measures;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an institution is adequately capitalized if it has a total risk-based capital ratio of 8% or greater, has a Tier 1 risk-based capital ratio
of 4% or greater, and has a leverage ratio of 4% or greater;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an institution is undercapitalized if it has a total risk-based capital ratio of less than 8%, has a Tier 1 risk-based capital ratio that
is less than 4% or has a leverage ratio that is less than 4%;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an institution is significantly undercapitalized if it has a total risk-based capital ratio that is less than 6%, a Tier 1 risk-based
capital ratio that is less than 3% or a leverage ratio that is less than 3%; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | an institution is critically undercapitalized if its tangible equity is equal to or less than 2% of its total assets.
| | - |  | -------------------------------------------------------------------------------------------------------------------------

The FDIC, after an opportunity for a hearing, has authority to downgrade an institution from well capitalized
to adequately capitalized or to subject an adequately capitalized or undercapitalized institution to the supervisory actions applicable to the next lower category, for supervisory concerns.

Generally, FDICIA requires that an undercapitalized institution must submit an acceptable capital restoration plan to the
appropriate federal banking agency within 45 days after the institution becomes undercapitalized and the agency must take action on the plan within 60 days. The appropriate federal banking agency may not accept a capital restoration plan
unless, among other requirements, each company having control of the institution has guaranteed that the institution will comply with the plan until the institution has been adequately capitalized on average during each of the three consecutive
calendar quarters and has provided adequate assurances of performance. The aggregate liability under this provision of all companies having control of an institution is limited to the lesser of:



| |  |  | 5% of the institutions total assets at the time the institution becomes undercapitalized or
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | the amount which is necessary, or would have been necessary, to bring the institution into compliance with all capital standards applicable to the
institution as of the time the institution fails to comply with the plan filed pursuant to FDICIA
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

An
undercapitalized institution may not acquire an interest in any company or any other insured depository institution, establish or acquire additional branch offices or engage in any new business unless the appropriate federal banking
agency has accepted its capital restoration plan, the institution is implementing the plan, and the agency determines that the proposed action is consistent with and will further the achievement of the plan, or the appropriate Federal banking agency
determines the proposed action will further the purpose of the prompt corrective action sections of FDICIA.

If an
institution is critically undercapitalized, it must comply with the restrictions described above. In addition, the appropriate Federal banking agency is authorized to restrict the activities of any critically undercapitalized
institution and to prohibit such an institution, without the appropriate Federal banking agencys prior written approval, from:



| |  |  | entering into any material transaction other than in the usual course of business;
| | - |  | ----------------------------------------------------------------------------------



| |  |  | engaging in any covered transaction with affiliates (as defined in Section 23A(b) of the Federal Reserve Act);
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | paying excessive compensation or bonuses; and
| | - |  | ---------------------------------------------



| |  |  | paying interest on new or renewed liabilities at a rate that would increase the institutions weighted average costs of funds to a level
significantly exceeding the prevailing rates of interest on insured deposits in the institutions normal market areas.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The prompt corrective action provisions of FDICIA also provide that in general
no institution may make a capital distribution if it would cause the institution to become undercapitalized. Capital distributions include cash (but not stock) dividends, stock purchases, redemptions, and other distributions of capital
to the owners of an institution.

Additionally, FDICIA requires, among other things, that:



| |  |  | only a well capitalized depository institution may accept brokered deposits without prior regulatory approval and
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | the appropriate federal banking agency annually examine all insured depository institutions, with some exceptions for small, well
capitalized institutions and state-chartered institutions examined by state regulators.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As of
December 31, 2009, OptimumBank met the capital requirements of a well capitalized institution. For additional information regarding OptimumBanks capital ratios and requirements, see Managements Discussion and
Analysis  Regulatory Capital Adequacy.

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

Loans to One Borrower. Florida law generally allows a state bank such as OptimumBank
to extend credit to any one borrower (and certain related entities of such borrower) in an amount up to 25% of its capital accounts, provided that the unsecured portion may not exceed 15% of the capital accounts of the bank. Based upon
OptimumBanks capital, the maximum loan OptimumBank is currently permitted to make is approximately $4.0 million, provided the unsecured portion does not exceed approximately $2.4 million.

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

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

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

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



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##### Table of Contents

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



| |  |  | Federal Truth-In-Lending Act governing disclosures of credit terms to consumer borrowers;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Community Reinvestment Act requiring financial institutions to meet their obligations to provide for the total credit needs of the communities they
serve, including investing their assets in loans to low and moderate-income borrowers;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Home Mortgage Disclosure Act requiring financial institutions to provide information to enable public officials to determine whether a financial
institution is fulfilling its obligations to meet the housing needs of the community it serves;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equal Credit Opportunity Act prohibiting discrimination on the basis of race, creed or other prohibitive factors in extending credit;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Real Estate Settlement Procedures Act which requires lenders to disclose certain information regarding the nature and cost of real estate settlements,
and prohibits certain lending practices, as well as limits escrow account amounts in real estate transactions;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fair Debt Collection Act governing the manner in which consumer debts may be collected by collection agencies;
| | - |  | --------------------------------------------------------------------------------------------------------------



| |  |  | Fair and Accurate Credit Transactions Act which establishes additional rights for consumers to obtain and correct credit reports, addresses identity
theft, and establishes additional requirements for consumer reporting agencies and financial institutions that provide adverse credit information to a consumer reporting agency; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The rules and regulations of various federal agencies charged with the responsibility of implementing such federal laws.
| | - |  | ------------------------------------------------------------------------------------------------------------------------

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



| |  |  | The Gramm-Leach-Bliley Act of 1999 privacy provisions, which require us to maintain privacy policies intended to safeguard consumer financial
information, to disclose these policies to our customers, and allow customers to opt-out of having their financial service providers disclose their confidential financial information to non-affiliated third parties, subject to certain
exceptions;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying
with administrative subpoenas of financial records; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Electronic Funds Transfer Act and Regulation E, which govern automatic deposits to, and withdrawals from, deposit accounts and customers rights
and liabilities arising from the use of automated teller machines and other electronic banking services.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Enforcement Powers. Congress has provided the federal bank regulatory agencies with an array of powers to enforce laws,
rules, regulations and orders. Among other things, the agencies may require that institutions cease and desist from certain activities, may preclude persons from participating in the affairs of insured depository institutions, may suspend or remove
deposit insurance, and may impose civil money penalties against institution-affiliated parties for certain violations.

Community Redevelopment Act

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



8



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##### Table of Contents

Effect of Governmental Monetary Policies

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

Statistical Profile and Other Financial Data

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



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

The following
table sets forth information with respect to our main office and branch offices as of December 31, 2009.



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



|(1) | On February 1, 2007, OptimumBank entered into a sale/leaseback transaction for this facility. No gain or loss was recognized on this transaction. The lease is for
a seven-year term. The monthly lease payment at December 31, 2009 was $4,444. The tenant is responsible for maintenance and real estate taxes.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Lease is for a ten-year term, with two five-year options to renew, for 2,500 square feet. The monthly lease payment at December 31, 2009 was $6,449.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



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

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



9



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##### Table of Contents

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

No matters were submitted to a vote of our security holders during the fourth quarter of the year ended December 31, 2009.

PART II



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

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



|     |  |         |  |       |  |      
|---- |  | ------- |  | ----- |  | -----
|Year |  | Quarter |  | High  |  | Low  
|2008 |  | First   |  | $9.71 |  | $5.16
|     |  | Second  |  | $9.45 |  | $6.75
|     |  | Third   |  | $8.01 |  | $3.84
|     |  | Fourth  |  | $6.00 |  | $3.08
|     |  |         | 
|2009 |  | First   |  | $5.60 |  | $3.18
|     |  | Second  |  | $5.99 |  | $2.97
|     |  | Third   |  | $5.00 |  | $2.70
|     |  | Fourth  |  | $3.15 |  | $1.25

We had approximately
205 holders registered or in street name as of December 31, 2009.

On December 28, 2009, the Nasdaq Stock Market
notified us that we failed to comply with the Nasdaq Global Market requirements because the market value of our publicly held shares (MVPHS), over the last 30 consecutive trading days, fell below the minimum $5,000,000 requirement for
continued listing on the Global Market. We will be provided 180 calendar days, or until June 28, 2010, to regain compliance. If at any time before June 28, 2010, the MVPHS of our common stock is $5,000,000 or greater for a
minimum of 10 consecutive business days, NASDAQ will notify us that we have achieved compliance with the MVPHS requirement. If we are unable to comply with the MVPHS requirement by June 28, 2010, our common stock will be delisted from the
Global Market.

We cannot predict whether we will achieve compliance with the Global Market MVPHS requirement by the stated
deadline. As a result, we are considering our alternatives, including the submission of an application for transfer to the Nasdaq Capital Market, provided we can meet the minimum requirements for continued listing on that market, which would
include a $1.00 per share minimum bid price.

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

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



10



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##### Table of Contents

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

SELECTED FINANCIAL DATA

At December 31, or for the Year Then Ended

(Dollars in thousands, except per share figures)



|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|---------------------------------------------------------------------------------------- |  | ---- | --------- | -- | ---- | --------- | - | ---- | --------- | - | ---- | --------- | - | ---- | --------- | -
|                                                                                         |  | 2009 |           |    | 2008 |           |   | 2007 |           |   | 2006 |           |   | 2005 |          
|At Year End:                                                                             |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|                                                                                         |  |      |           |    |     
|Cash and cash equivalents                                                                |  | $    | 36,784    |    |      | 3,220     |   |      | 701       |   |      | 1,604     |   |      | 1,154     |  
|Securities held to maturity                                                              |  |      | 81,141    |    |      | 82,208    |   |      | 58,471    |   |      | 33,399    |   |      | 25,618    |  
|Security available for sale                                                              |  |      |          |    |      | 244       |   |      | 244       |   |      | 241       |   |      | 243       |  
|Loans, net                                                                               |  |      | 134,126   |    |      | 160,699   |   |      | 173,323   |   |      | 181,878   |   |      | 170,226   |  
|All other assets                                                                         |  |      | 17,906    |    |      | 9,369     |   |      | 8,808     |   |      | 8,581     |   |      | 8,803     |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Total assets                                                                             |  | $    | 269,957   |    |      | 255,740   |   |      | 241,547   |   |      | 225,703   |   |      | 206,044   |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Deposit accounts                                                                         |  |      | 151,682   |    |      | 114,925   |   |      | 125,034   |   |      | 129,502   |   |      | 114,064   |  
|Federal Home Loan Bank advances                                                          |  |      | 57,700    |    |      | 68,700    |   |      | 56,850    |   |      | 56,550    |   |      | 52,950    |  
|Other borrowings                                                                         |  |      | 41,800    |    |      | 41,800    |   |      | 28,900    |   |      | 10,950    |   |      | 12,950    |  
|Junior subordinated debenture                                                            |  |      | 5,155     |    |      | 5,155     |   |      | 5,155     |   |      | 5,155     |   |      | 5,155     |  
|All other liabilities                                                                    |  |      | 2,332     |    |      | 2,395     |   |      | 3,361     |   |      | 3,123     |   |      | 2,515     |  
|Stockholders equity                                                                     |  |      | 11,288    |    |      | 22,765    |   |      | 22,247    |   |      | 20,423    |   |      | 18,410    |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Total liabilities and stockholders equity                                               |  | $    | 269,957   |    |      | 255,740   |   |      | 241,547   |   |      | 225,703   |   |      | 206,044   |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|                                                                                         |  |      |           |    |     
|For the Year:                                                                            |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|                                                                                         |  |      |           |    |     
|Total interest income                                                                    |  |      | 14,006    |    |      | 15,570    |   |      | 16,137    |   |      | 14,191    |   |      | 11,334    |  
|Total interest expense                                                                   |  |      | 8,351     |    |      | 9,211     |   |      | 9,700     |   |      | 8,063     |   |      | 5,841     |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Net interest income                                                                      |  |      | 5,655     |    |      | 6,359     |   |      | 6,437     |   |      | 6,128     |   |      | 5,493     |  
|Provision for loan losses                                                                |  |      | 15,794    |    |      | 1,374     |   |      | 476       |   |      | 265       |   |      | 149       |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Net interest (expense) income after provision for loan losses                            |  |      | (10,139   | )  |      | 4,985     |   |      | 5,961     |   |      | 5,863     |   |      | 5,344     |  
|                                                                                         |  |      |           |    |     
|Noninterest income (expense)                                                             |  |      | (145      | )  |      | 393       |   |      | 533       |   |      | 628       |   |      | 635       |  
|Noninterest expenses                                                                     |  |      | 4,698     |    |      | 4,545     |   |      | 3,749     |   |      | 3,574     |   |      | 3,396     |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|(Loss) earnings before income (benefit) taxes                                            |  |      | (14,982   | )  |      | 833       |   |      | 2,745     |   |      | 2,917     |   |      | 2,583     |  
|Income taxes (benefit) expense                                                           |  |      | (3,501    | )  |      | 313       |   |      | 1,003     |   |      | 1,083     |   |      | 982       |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Net (loss) earnings                                                                      |  | $    | (11,481   | )  |      | 520       |   |      | 1,742     |   |      | 1,834     |   |      | 1,601     |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Net (loss) earnings per share, basic (1)                                                 |  | $    | (3.50     | )  |      | .16       |   |      | .53       |   |      | .56       |   |      | .50       |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Net (loss) earnings per share, diluted (1)                                               |  | $    | (3.50     | )  |      | .16       |   |      | .52       |   |      | .54       |   |      | .48       |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Weighted-average number of shares outstanding, basic (1)                                 |  |      | 3,276,842 |    |      | 3,277,042 |   |      | 3,267,838 |   |      | 3,256,425 |   |      | 3,231,846 |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|Weighted-average number of shares outstanding, diluted (1)                               |  |      | 3,276,842 |    |      | 3,322,430 |   |      | 3,343,981 |   |      | 3,395,298 |   |      | 3,356,980 |  
|                                                                                         |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|                                                                                         |  |      |           |    |     
|Ratios and Other Data:                                                                   |  |      |           |    |      |           |   |      |           |   |      |           |   |      |           |  
|                                                                                         |  |      |           |    |     
|Return on average assets                                                                 |  |      | (4.23     | )% |      | .21       | % |      | .73       | % |      | .85       | % |      | .86       | %
|Return on average equity                                                                 |  |      | (55.55    | )% |      | 2.26      | % |      | 8.16      | % |      | 9.37      | % |      | 9.09      | %
|Average equity to average assets                                                         |  |      | 7.62      | %  |      | 9.15      | % |      | 8.96      | % |      | 9.12      | % |      | 9.42      | %
|Net interest margin during the year                                                      |  |      | 2.14      | %  |      | 2.61      | % |      | 2.78      | % |      | 2.96      | % |      | 3.08      | %
|Interest-rate differential during the year                                               |  |      | 1.91      | %  |      | 2.26      | % |      | 2.34      | % |      | 2.63      | % |      | 2.84      | %
|Net yield on average interest-earning assets                                             |  |      | 5.30      | %  |      | 6.38      | % |      | 6.96      | % |      | 6.85      | % |      | 6.36      | %
|Noninterest expenses to average assets                                                   |  |      | 1.73      | %  |      | 1.81      | % |      | 1.57      | % |      | 1.67      | % |      | 1.82      | %
|Ratio of average interest-earning assets to average interest-bearing liabilities         |  |      | 1.07      |    |      | 1.09      |   |      | 1.10      |   |      | 1.08      |   |      | 1.08      |  
|Nonperforming loans and foreclosed assets as a percentage of total assets at end of year |  |      | 10.87     | %  |      | 2.03      | % |      | 0.13      | % |      |          |   |      |          |  
|Allowance for loan losses as a percentage of total loans at end of year                  |  |      | 6.54      | %  |      | 1.18      | % |      | .40       | % |      | .54       | % |      | .46       | %
|Total number of banking offices                                                          |  |      | 3         |    |      | 3         |   |      | 3         |   |      | 3         |   |      | 3         |  
|Total shares outstanding at end of year (1)                                              |  |      | 3,276,842 |    |      | 3,120,992 |   |      | 3,121,132 |   |      | 3,109,359 |   |      | 3,083,653 |  
|Book value per share at end of year (1)                                                  |  | $    | 3.44      |    |      | 6.95      |   |      | 6.81      |   |      | 6.27      |   |      | 5.70      |  



|(1) | All share and per share amounts have been adjusted to reflect the 5% stock dividends declared in May 2009, 2008 and 2007.
|--- | -------------------------------------------------------------------------------------------------------------------------



11



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##### Table of Contents

MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

OptimumBank
Holdings, Inc. was formed in 2004 as a Florida corporation that holds all the outstanding shares of OptimumBank. Our only business is the ownership and operation of OptimumBank, a Florida chartered bank. OptimumBank commenced operations in November
2000, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC. OptimumBank provides community banking services to individuals and businesses in Broward, Miami-Dade and Palm Beach counties. OptimumBank conducts operations
from its Fort Lauderdale headquarters and three branch offices in Fort Lauderdale, Plantation and Deerfield Beach. The Banks wholly-owned subsidiaries are OB Real Estate Management, LLC, OB Real Estate Holdings, LLC and OB Real Estate Holdings
1503, LLC, all of which were formed in 2009. OB Real Estate Management, LLC is engaged in managing foreclosed real estate, but had no activity in 2009. OB Real Estate Holdings, LLC and OB Real Estate Holdings 1503, LLC are engaged in holding and
disposing of foreclosed real estate.

At December 31, 2009, our company had total assets of $270.0 million, net loans of
$134.1 million, total deposits of $151.7 million and stockholders equity of $11.3 million. During 2009, our company had a net loss of $(11.5) million.

Critical Accounting Policies

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

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

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

The allowance for loan losses is also discussed as part of Loan Portfolio,
Asset Quality and Allowance for Loan Losses and in Note 3 of Notes to the Consolidated Financial Statements. Our significant accounting policies are discussed in Note 1 of Notes to the Consolidated Financial Statements.

Regulation and Legislation

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



12



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##### Table of Contents

Loan Portfolio, Asset Quality and Allowance for Loan Losses

Our primary business is making real estate loans. This activity may subject us to potential loan losses, the magnitude of which depends on
a variety of economic factors affecting borrowers which are beyond our control. For the past two years, there has been a dramatic decrease in housing and real estate values in south Florida, coupled with a significant increase in the rate of
unemployment. With most of our loans concentrated in south Florida, the decline in local economic conditions has adversely affected the values of our real estate collateral. These trends have contributed to an increase in our impaired loans and
reduced asset quality. As of December 31, 2009, our impaired loans were approximately $37.9 million, or 28.3% of the net loan portfolio. Impaired loans and real estate owned were approximately $43.5 million as of this same date, or 16.1%
of total assets. If market conditions continue to deteriorate, they may lead to additional valuation adjustments on our loan portfolio and real estate owned as we continue to reassess the market value of our loan portfolio, the losses associated
with impaired loans, and the net realizable value of real estate owned.

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



|                                  |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  
|--------------------------------- |  | ---------------------- | ------- | - | --------- | ------ | - | ------ | - | ------- | --------- |  | ------ | ------ |  | - | --------- | - |  | ------ | -
|                                  |  | At December 31,        |        
|                                  |  | 2009                   |         |   | 2008      |        |   | 2007   |  
|                                  |  | Amount                 |         |   | % ofTotal |        |   | Amount |   |         | % ofTotal |  |        | Amount |  |   | % ofTotal |  
|                                  |  | (dollars in thousands) |        
|Residential real estate           |  | $                      | 55,915  |   |           | 39.06  | % |        | $ | 58,693  |           |  | 36.25  | %      |  | $ | 65,908    |   |  | 38.08  | %
|Multi-family real estate          |  |                        | 5,162   |   |           | 3.61   |   |        |   | 9,588   |           |  | 5.92   |        |  |   | 10,275    |   |  | 5.94   |  
|Commercial real estate            |  |                        | 58,901  |   |           | 41.14  |   |        |   | 73,541  |           |  | 45.42  |        |  |   | 75,777    |   |  | 43.78  |  
|Land and construction             |  |                        | 22,355  |   |           | 15.61  |   |        |   | 19,223  |           |  | 11.87  |        |  |   | 21,093    |   |  | 12.19  |  
|Commercial                        |  |                        |        |   |           |       |   |        |   |        |           |  |       |        |  |   |          |   |  |       |  
|Consumer                          |  |                        | 836     |   |           | .58    |   |        |   | 878     |           |  | .54    |        |  |   | 15        |   |  | .01    |  
|                                  |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  
|Total loans                       |  |                        | 143,169 |   |           | 100.00 | % |        |   | 161,923 |           |  | 100.00 | %      |  |   | 173,068   |   |  | 100.00 | %
|                                  |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  
|                                  |  |                        |         |   |           |       
|Add (deduct):                     |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  
|Allowance for loan losses         |  |                        | (9,363  | ) |           |        |   |        |   | (1,906  | )         |  |        |        |  |   | (692      | ) |  |        |  
|Net deferred loan costs discounts |  |                        | 320     |   |           |        |   |        |   | 682     |           |  |        |        |  |   | 947       |   |  |        |  
|                                  |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  
|Loans, net                        |  | $                      | 134,126 |   |           |        |   |        | $ | 160,699 |           |  |        |        |  | $ | 173,323   |   |  |        |  
|                                  |  |                        |         |   |           |        |   |        |   |         |           |  |        |        |  |   |           |   |  |        |  



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



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##### Table of Contents

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



|                          |  |                         |        |   |      |   |       |      |  |   |      |   |  |      |     |   |  |   |    
|------------------------- |  | ----------------------- | ------ | - | ---- | - | ----- | ---- |  | - | ---- | - |  | ---- | --- | - |  | - | ---
|                          |  | Year Ended December 31,
|                          |  | 2009                    |        |   | 2008 |   |       | 2007 |  |   | 2006 |   |  | 2005
|Beginning balance         |  | $                       | 1,906  |   |      | $ | 692   |      |  | $ | 974  |   |  | $    | 777 |   |  | $ | 628
|Provision for loan losses |  |                         | 15,794 |   |      |   | 1,374 |      |  |   | 476  |   |  |      | 265 |   |  |   | 149
|Loans charged off         |  |                         | (8,337 | ) |      |   | (160  | )    |  |   | (758 | ) |  |      | (68 | ) |  |   |   
|                          |  |                         |        |   |      |   |       |      |  |   |      |   |  |      |     |   |  |   |    
|Ending balance            |  | $                       | 9,363  |   |      | $ | 1,906 |      |  | $ | 692  |   |  | $    | 974 |   |  | $ | 777
|                          |  |                         |        |   |      |   |       |      |  |   |      |   |  |      |     |   |  |   |    

The allowance for loan losses represents
our estimate of probable incurred losses inherent in the existing loan portfolio. The allowance for loan losses is increased by the provision for loan losses charged to expense and reduced by loans charged off, net of recoveries. The allowance
for loan losses is determined based on our assessment of several factors: reviews and evaluation of individual loans, historical loan loss experiences, 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 current 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 two components. The first component consists of amounts specifically reserved
(specific allowance) for specific loans identified as impaired, as defined by FASB Accounting Standards Codification No. 310 (ASC 310). Impaired loans are those loans that management has estimated will not repay as
agreed upon. We measure impairment on a loan by loan basis for all our 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. A loan may be impaired (i.e. not expected to repay as agreed), but may be sufficiently collateralized such that we expect to recover all principal and interest eventually, and therefore no
specific reserve is warranted.

The second component is a general reserve (general allowance) on all of our loans
other than those identified as impaired. We group these loans into categories with similar characteristics and then apply a loss factor to each group which is derived from our historical loss experience for that category adjusted for qualitative
factors. The aggregate of these two components results in our total allowance for loan losses.

In the table below, we have
shown the two components, as discussed above, of our allowance for loan losses at December 31, 2009, 2008 and 2007 (dollars in thousands):



|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------- |  | --------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                        |  | At December 31, |        
|                                                        |  | 2009            |         |   | 2008 |   |         | 2007 | 
|Impaired loans                                          |  | $               | 43,501  |   |      | $ | 10,938  |      |  | $ |        |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Specific Allowance on Impaired Loans                    |  | $               | 5,607   |   |      | $ | 1,120   |      |  | $ |        |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Specific Allowance as percentage of impaired loans      |  |                 | 12.89   | % |      |   | 10.24   | %    |  |   |        |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Total loans other than impaired loans                   |  | $               | 99,668  |   |      | $ | 150,985 |      |  | $ | 173,068 |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|General Allowance                                       |  | $               | 3,756   |   |      | $ | 786     |      |  | $ | 692     |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|General allowance as percentage of non impaired loans   |  |                 | 3.77    | % |      |   | .52     | %    |  |   | .40     | %
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Total loans                                             |  | $               | 143,169 |   |      | $ | 161,923 |      |  | $ | 173,068 |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Total allowance for loan losses                         |  | $               | 9,363   |   |      | $ | 1,906   |      |  | $ | 692     |  
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  
|Allowance for loan losses as percentage of total loans. |  |                 | 6.54    | % |      |   | 1.18    | %    |  |   | .40     | %
|                                                        |  |                 |         |   |      |   |         |      |  |   |         |  



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##### Table of Contents

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



|                                                                     |  |                 |       |   |                |        |   |        |   |       |                |  |        |        |  |   |                |   |  |        |  
|-------------------------------------------------------------------- |  | --------------- | ----- | - | -------------- | ------ | - | ------ | - | ----- | -------------- |  | ------ | ------ |  | - | -------------- | - |  | ------ | -
|                                                                     |  | At December 31, |      
|                                                                     |  | 2009            |       |   | 2008           |        |   | 2007   |  
|                                                                     |  | Amount          |       |   | % ofTotalLoans |        |   | Amount |   |       | % ofTotalLoans |  |        | Amount |  |   | % ofTotalLoans |  
|Residential real estate                                              |  | $               | 2,049 |   |                | 39.06  | % |        | $ | 928   |                |  | 36.25  | %      |  | $ | 187            |   |  | 38.08  | %
|Multi-family real estate                                             |  |                 | 489   |   |                | 3.61   |   |        |   | 62    |                |  | 5.92   |        |  |   | 59             |   |  | 5.94   |  
|Commercial real estate                                               |  |                 | 1,466 |   |                | 41.14  |   |        |   | 463   |                |  | 45.42  |        |  |   | 379            |   |  | 43.78  |  
|Land and construction                                                |  |                 | 5,227 |   |                | 15.61  |   |        |   | 444   |                |  | 11.87  |        |  |   | 67             |   |  | 12.19  |  
|Commercial                                                           |  |                 |      |   |                |       |   |        |   |      |                |  |       |        |  |   |               |   |  |       |  
|Consumer                                                             |  |                 | 132   |   |                | .58    |   |        |   | 9     |                |  | .54    |        |  |   |               |   |  | .01    |  
|                                                                     |  |                 |       |   |                |        |   |        |   |       |                |  |        |        |  |   |                |   |  |        |  
|Total allowance for loan losses                                      |  | $               | 9,363 |   |                | 100.00 | % |        | $ | 1,906 |                |  | 100.00 | %      |  | $ | 692            |   |  | 100.00 | %
|                                                                     |  |                 |       |   |                |        |   |        |   |       |                |  |        |        |  |   |                |   |  |        |  
|Allowance for loan losses as a percentage of total loans outstanding |  |                 | 6.54  | % |                |        |   |        |   | 1.18  | %              |  |        |        |  |   | 0.40           | % |  |        |  
|                                                                     |  |                 |       |   |                |        |   |        |   |       |                |  |        |        |  |   |                |   |  |        |  



|                                                                     |  |                 |      |   |                |        |   |        |   |      |                |  |        |  
|-------------------------------------------------------------------- |  | --------------- | ---- | - | -------------- | ------ | - | ------ | - | ---- | -------------- |  | ------ | -
|                                                                     |  | At December 31, |     
|                                                                     |  | 2006            |      |   | 2005           |       
|                                                                     |  | Amount          |      |   | % ofTotalLoans |        |   | Amount |   |      | % ofTotalLoans | 
|Residential real estate                                              |  | $               | 400  |   |                | 38.99  | % |        | $ | 206  |                |  | 38.29  | %
|Multi-family real estate                                             |  |                 | 54   |   |                | 5.93   |   |        |   | 81   |                |  | 8.91   |  
|Commercial real estate                                               |  |                 | 406  |   |                | 37.89  |   |        |   | 347  |                |  | 31.97  |  
|Land and construction                                                |  |                 | 114  |   |                | 17.07  |   |        |   | 140  |                |  | 20.47  |  
|Commercial                                                           |  |                 |     |   |                |       |   |        |   | 3    |                |  | .33    |  
|Consumer                                                             |  |                 |     |   |                | .12    |   |        |   |     |                |  | .03    |  
|                                                                     |  |                 |      |   |                |        |   |        |   |      |                |  |        |  
|Total allowance for loan losses                                      |  | $               | 974  |   |                | 100.00 | % |        | $ | 777  |                |  | 100.00 | %
|                                                                     |  |                 |      |   |                |        |   |        |   |      |                |  |        |  
|Allowance for loan losses as a percentage of total loans outstanding |  |                 | 0.54 | % |                |        |   |        |   | 0.46 | %              |  |        |  
|                                                                     |  |                 |      |   |                |        |   |        |   |      |                |  |        |  

The following summarizes impaired loans (in thousands):



|                                                         |  |                 |        |   |      |   |        |  
|-------------------------------------------------------- |  | --------------- | ------ | - | ---- | - | ------ | -
|                                                         |  | At December 31, |       
|                                                         |  | 2009            |        |   | 2008 |  
|Collateral dependent loans identified as impaired:       |  |                 |        |   |      |   |        |  
|Gross loans with no related allowance for losses         |  | $               | 21,846 |   |      | $ | 4,001  |  
|                                                         |  |                 |        |   |      |   |        |  
|Gross loans with related allowance for losses recorded   |  |                 | 18,032 |   |      |   | 6,937  |  
|Less allowances on these loans                           |  |                 | (5,542 | ) |      |   | (1,120 | )
|                                                         |  |                 |        |   |      |   |        |  
|Net loans with related allowance                         |  |                 | 12,490 |   |      |   | 5,817  |  
|                                                         |  |                 |        |   |      |   |        |  
|Net investment in collateral dependent impaired loans    |  |                 | 34,336 |   |      |   | 9,818  |  
|                                                         |  |                 |        |   |      |   |        |  
|Noncollateral dependent loans identified as impaired:    |  |                 |        |   |      |   |        |  
|Gross loans with related allowance for losses recorded   |  |                 | 3,623  |   |      |   |       |  
|Less allowance on these loans                            |  |                 | (65    | ) |      |   |       |  
|                                                         |  |                 |        |   |      |   |        |  
|Net investment in noncollateral dependent impaired loans |  |                 | 3,558  |   |      |   |       |  
|                                                         |  |                 |        |   |      |   |        |  
|Net investment in impaired loans                         |  | $               | 37,894 |   |      | $ | 9,818  |  
|                                                         |  |                 |        |   |      |   |        |  



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##### Table of Contents

There were no impaired loans at December 31, 2007.

During 2009, 2008 and 2007, the average net investment in impaired loans and interest income recognized and received on impaired loans is
as follows (in thousands):



|                                                           |  |                         |        |      |   |       |  |   |      
|---------------------------------------------------------- |  | ----------------------- | ------ | ---- | - | ----- |  | - | -----
|                                                           |  | Year Ended December 31,
|                                                           |  | 2009                    |        | 2008 |   | 2007 
|Average investment in impaired loans                       |  | $                       | 25,017 |      | $ | 3,240 |  | $ | 1,581
|                                                           |  |                         |        |      |   |       |  |   |      
|Interest income recognized on impaired loans               |  | $                       | 280    |      | $ |      |  | $ | 39   
|                                                           |  |                         |        |      |   |       |  |   |      
|Interest income received on a cash basis on impaired loans |  | $                       | 584    |      | $ |      |  | $ | 39   
|                                                           |  |                         |        |      |   |       |  |   |      

Nonaccrual loans and loans over 90 days past due still
accruing interest were as follows as of December 31, 2009, 2008 and 2007 (in thousands):



|                                                      |  |                 |        |      |   |       |  |   |    
|----------------------------------------------------- |  | --------------- | ------ | ---- | - | ----- |  | - | ---
|                                                      |  | At December 31,
|                                                      |  | 2009            |        | 2008 |   | 2007 
|Nonaccrual loans                                      |  | $               | 23,848 |      | $ | 5,086 |  | $ | 245
|                                                      |  |                 |        |      |   |       |  |   |    
|Past ninety days or more, but still accruing interest |  | $               |       |      | $ |      |  | $ |   
|                                                      |  |                 |        |      |   |       |  |   |    

At December 31, 2006 and 2005, the Company had no nonaccrual
loans and loans over 90 days past due.

Liquidity and Capital Resources

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

Our primary sources of cash during the year ended December 31, 2009 were from deposits of $36.8 million, principal repayments of
securities held to maturity of $25.4 million and net repayments of loans of $5.1 million. Cash was used primarily to purchase securities held to maturity totaling $24.0 million and repayment of Federal Home Loan Bank advances of $11.0 million. In
order to increase core deposits, we have priced our deposit rates competitively. We will adjust rates on our deposits to attract or retain deposits as needed. In addition to obtaining funds from depositors in our market area, from time to time we
have utilized brokers to obtain deposits outside our market area.

We have agreed with the bank regulatory agencies that we
will limit our asset growth to no more than 5%, we will make no significant change in our funding sources, and we will not increase our brokered deposits. Starting in December, 2009, we reduced our reliance on brokered deposits by no longer
accepting or rolling over existing brokered deposits. As of December 31, 2009, the Bank had $13.9 million in brokered deposits representing 9.2% of total deposits, of which $12.2 million will mature and not rollover in 2010. Under FDIC rules,
if OptimumBank ceases to be a well capitalized institution for bank regulatory purposes, the interest rates that we pay on our market area deposits and our ability to accept brokered deposits may be further restricted.

In addition to obtaining funds from depositors, we may borrow funds from other financial institutions. We are a member of the Federal
Home Loan Bank of Atlanta, which allows us to borrow funds under a pre-arranged line of credit equal to 40% of the Banks total assets. As of December 31, 2009, we had $57.7 million in borrowings outstanding from the Federal Home Loan Bank
of Atlanta to facilitate loan fundings and manage our asset and liability structure. In addition, we have an unsecured federal funds line of credit with Independent Bankers Bank of Florida totaling $6 million, none of which was
outstanding at December 31, 2009. This credit line is normally used to meet short-term funding demands. At December 31, 2009, we sold securities under an agreement to repurchase totaling $41.8 million. These borrowings are collateralized
by securities held to maturity with a carrying value of $49.2 million at December 31, 2009. We believe our liquidity sources are adequate to meet our operating needs.



16



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##### Table of Contents

Securities

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

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



|                             |  |               |        |           |   |       
|---------------------------- |  | ------------- | ------ | --------- | - | ------
|                             |  | AmortizedCost |        | FairValue
|At December 31, 2009:        |  |               |        |           |   |       
|Securities held to maturity: |  |               |        |           |   |       
|Mortgage-backed securities   |  | $             | 81,041 |           | $ | 76,884
|Foreign bond                 |  |               | 100    |           |   | 100   
|                             |  |               |        |           |   |       
|                             |  | $             | 81,141 |           | $ | 76,984
|                             |  |               |        |           |   |       
|                             |  |              
|At December 31, 2008:        |  |               |        |           |   |       
|Securities held to maturity: |  |               |        |           |   |       
|Mortgage-backed securities   |  | $             | 82,108 |           | $ | 78,656
|Foreign bond                 |  |               | 100    |           |   | 100   
|                             |  |               |        |           |   |       
|                             |  | $             | 82,208 |           | $ | 78,756
|                             |  |               |        |           |   |       
|Security available for sale- |  |               |        |           |   |       
|Mutual fund                  |  | $             | 250    |           | $ | 244   
|                             |  |               |        |           |   |       
|                             |  |              
|At December 31, 2007:        |  |               |        |           |   |       
|Securities held to maturity: |  |               |        |           |   |       
|Mortgage-backed securities   |  | $             | 58,371 |           | $ | 58,017
|Foreign bond                 |  |               | 100    |           |   | 100   
|                             |  |               |        |           |   |       
|                             |  | $             | 58,471 |           | $ | 58,117
|                             |  |               |        |           |   |       
|Security available for sale- |  |               |        |           |   |       
|Mutual fund                  |  | $             | 250    |           | $ | 244   
|                             |  |               |        |           |   |       

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



|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|-------------------------- |  | -------------- | - | ----------------------------- | - | ------------------------------- |  | -------------- | ------ | ----- | - | ------ |  | - | ------ |  | ---- | -
|                           |  | WithinOne Year |   | After OneBut 
WithinFiveYears |   | After FiveYearsThroughTen Years |  | After TenYears |        | Total |   | Yield  | 
|At December 31, 2009:      |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Mortgage-backed securities |  | $              |  |                               | $ |                                |  | $              | 11,576 |       | $ | 69,465 |  | $ | 81,041 |  | 5.39 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Foreign bond               |  | $              |  |                               | $ |                                |  | $              | 100    |       | $ |       |  | $ | 100    |  | 5.95 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|                           |  |                |   |                               |   |                                
|At December 31, 2008:      |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Mortgage-backed securities |  | $              |  |                               | $ |                                |  | $              | 1,604  |       | $ | 80,504 |  | $ | 82,108 |  | 5.41 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Foreign bond               |  | $              |  |                               | $ |                                |  | $              | 100    |       | $ |       |  | $ | 100    |  | 5.95 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|                           |  |                |   |                               |   |                                
|At December 31, 2007:      |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Mortgage-backed securities |  | $              |  |                               | $ |                                |  | $              |       |       | $ | 58,371 |  | $ | 58,371 |  | 5.59 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  
|Foreign bond               |  | $              |  |                               | $ |                                |  | $              | 100    |       | $ |       |  | $ | 100    |  | 5.95 | %
|                           |  |                |   |                               |   |                                 |  |                |        |       |   |        |  |   |        |  |      |  



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At December 31, 2009, $35.3million of the
$81.1million in mortgage-backed securities (MBS) were U.S. agency MBS and $45.8million were private label MBS. Approximately $34.7 million of the private label MBS at
December 31, 2009 were downgraded to sub-investment grade securities during 2009 by the securities rating agencies. In general, non-investment grade securities cannot be used to collateralize borrowings and are considered to be
substandard assets by the Federal regulatory agencies. We evaluate our securities, including the private label MBS, for other than temporary impairment OTTI on at least a quarterly basis. In 2009, we recorded a $179,000 OTTI charge
to adjust for credit losses relating to five of the sub-investment grade securities with a total remaining principal balance of $13.8 million and fair value of $11.5 million. See Footnote 2 to the Consolidated Financial Statements for additional
information on our securities portfolio.

Regulatory Capital Adequacy

The Bank is subject to various regulatory capital requirements administered by the Federal and state banking agencies. As of
December 31, 2009, OptimumBank met the capital requirements of a well capitalized institution. 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.

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

REGULATORY CAPITAL REQUIREMENTS



|                                       |  |        |        |   |                              |   |        |                                                                      |        |  |      |        |  |   |        |  |       |  
|-------------------------------------- |  | ------ | ------ | - | ---------------------------- | - | ------ | -------------------------------------------------------------------- | ------ |  | ---- | ------ |  | - | ------ |  | ----- | -
|                                       |  | Actual |        |   | For Capital AdequacyPurposes |   |        | MinimumTo Be WellCapitalized
UnderPrompt CorrectiveAction Provisions |       
|                                       |  | Amount |        | % |                              |   | Amount |                                                                      | %      |  |      | Amount |  | % |       
|As of December 31, 2009:               |  |        |        |   |                              |   |        |                                                                      |        |  |      |        |  |   |        |  |       |  
|Total Capital to Risk-Weighted Assets  |  | $      | 18,342 |   | 10.23                        | % |        | $                                                                    | 14,349 |  | 8.00 | %      |  | $ | 17,937 |  | 10.00 | %
|Tier I Capital to Risk-Weighted Assets |  |        | 16,012 |   | 8.93                         |   |        |                                                                      | 7,175  |  | 4.00 |        |  |   | 10,762 |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 16,012 |   | 5.85                         |   |        |                                                                      | 10,952 |  | 4.00 |        |  |   | 13,690 |  | 5.00  |  
|                                       |  |        |        |   |                              |  
|As of December 31, 2008:               |  |        |        |   |                              |   |        |                                                                      |        |  |      |        |  |   |        |  |       |  
|Total Capital to Risk-Weighted Assets  |  |        | 29,357 |   | 18.91                        |   |        |                                                                      | 12,419 |  | 8.00 |        |  |   | 15,524 |  | 10.00 |  
|Tier I Capital to Risk-Weighted Assets |  |        | 27,451 |   | 17.68                        |   |        |                                                                      | 6,210  |  | 4.00 |        |  |   | 9,314  |  | 6.00  |  
|Tier I Capital to Total Assets         |  |        | 27,451 |   | 10.71                        |   |        |                                                                      | 10,254 |  | 4.00 |        |  |   | 12,818 |  | 5.00  |  
|                                       |  |        |        |   |                              |  
|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  |  



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##### Table of Contents

Market Risk

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

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

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

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

Asset Liability Management

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

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

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



19



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##### Table of Contents

The following table sets forth certain information relating to our interest-earning assets
and interest-bearing liabilities at December 31, 2009, that are estimated to mature or are scheduled to reprice within the period shown (dollars in thousands):

GAP MATURITY / REPRICING SCHEDULE



|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|---------------------------------- |  | -------------- | ------- | -- | --------------------------------------- | - | ------- | -------------------------------------------- |  | - | ---------------- | -- |  | ----- | ------ | -- |  | - | ------- | -
|                                   |  | OneYear
orLess |         |    | Morethan
OneYear andLess thanFive Years |   |         | Morethan FiveYears
andLess thanFifteen Years |  |   | OverFifteenYears |    |  | Total |       
|Loans (1):                         |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Residential real estate loans      |  | $              | 32,337  |    |                                         | $ | 22,629  |                                              |  | $ | 949              |    |  | $     |       |    |  | $ | 55,915  |  
|Multi-family real estate loans     |  |                | 4,214   |    |                                         |   | 948     |                                              |  |   |                 |    |  |       |       |    |  |   | 5,162   |  
|Commercial real estate loans       |  |                | 40,421  |    |                                         |   | 17,512  |                                              |  |   | 968              |    |  |       |       |    |  |   | 58,901  |  
|Land and construction              |  |                | 19,946  |    |                                         |   | 2,086   |                                              |  |   | 297              |    |  |       | 26     |    |  |   | 22,355  |  
|Consumer loans                     |  |                | 576     |    |                                         |   | 260     |                                              |  |   |                 |    |  |       |       |    |  |   | 836     |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Total loans                        |  |                | 97,494  |    |                                         |   | 43,435  |                                              |  |   | 2,214            |    |  |       | 26     |    |  |   | 143,169 |  
|                                   |  |                |         |    |                                        
|Federal funds sold                 |  |                | 26,722  |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 26,722  |  
|Securities (2)                     |  |                | 2,642   |    |                                         |   | 3,686   |                                              |  |   | 42,385           |    |  |       | 32,428 |    |  |   | 81,141  |  
|Federal Home Loan Bank stock       |  |                | 3,551   |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 3,551   |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Total rate-sensitive assets        |  |                | 130,409 |    |                                         |   | 47,121  |                                              |  |   | 44,599           |    |  |       | 32,454 |    |  |   | 254,583 |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|                                   |  |                |         |    |                                        
|Deposit accounts (3):              |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Money-market deposits              |  |                | 41,204  |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 41,204  |  
|Interest-bearing checking deposits |  |                | 1,157   |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 1,157   |  
|Savings deposits                   |  |                | 1,861   |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 1,861   |  
|Time deposits                      |  |                | 95,765  |    |                                         |   | 11,496  |                                              |  |   |                 |    |  |       |       |    |  |   | 107,261 |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Total deposits                     |  |                | 139,987 |    |                                         |   | 11,496  |                                              |  |   |                 |    |  |       |       |    |  |   | 151,483 |  
|                                   |  |                |         |    |                                        
|Federal Home Loan Bank advances    |  |                | 15,600  |    |                                         |   | 23,500  |                                              |  |   | 18,600           |    |  |       |       |    |  |   | 57,700  |  
|Other borrowings                   |  |                | 28,900  |    |                                         |   | 12,900  |                                              |  |   |                 |    |  |       |       |    |  |   | 41,800  |  
|Junior subordinated debenture      |  |                | 5,155   |    |                                         |   |        |                                              |  |   |                 |    |  |       |       |    |  |   | 5,155   |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Total rate-sensitive liabilities   |  |                | 189,642 |    |                                         |   | 47,896  |                                              |  |   | 18,600           |    |  |       |       |    |  |   | 256,138 |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|GAP (repricing differences)        |  | $              | (59,233 | )  |                                         | $ | (775    | )                                            |  | $ | 25,999           |    |  | $     | 32,454 |    |  | $ | (1,555  | )
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Cumulative GAP                     |  | $              | (59,233 | )  |                                         | $ | (60,008 | )                                            |  | $ | (34,009          | )  |  | $     | (1,555 | )  |  |   |         |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  
|Cumulative GAP/total assets        |  |                | (21.94  | )% |                                         |   | (22.23  | )%                                           |  |   | (12.60           | )% |  |       | (0.58  | )% |  |   |         |  
|                                   |  |                |         |    |                                         |   |         |                                              |  |   |                  |    |  |       |        |    |  |   |         |  



|(1) | In preparing the table above, adjustable-rate loans are included in the period in which the interest rates are next scheduled to adjust rather than in the period in
which the loans mature. Fixed-rate loans are scheduled, including repayment, according to their maturities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Securities are scheduled through the repricing date.
|--- | ----------------------------------------------------

|(3) | Money-market, interest-bearing checking and savings deposits are regarded as readily accessible withdrawable accounts. All other time deposits are scheduled through the
maturity dates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The following table sets forth loan maturities by type of loan at December 31, 2009 (in
thousands):



|                         |  |                 |        |                               |   |                 |  |       |         |  |   |        
|------------------------ |  | --------------- | ------ | ----------------------------- | - | --------------- |  | ----- | ------- |  | - | -------
|                         |  | One Yearor Less |        | After OneBut WithinFive Years |   | AfterFive Years |  | Total
|Residential real estate  |  | $               | 2,629  |                               | $ | 3,387           |  | $     | 49,899  |  | $ | 55,915 
|Multi-family real estate |  |                 |       |                               |   |                |  |       | 5,162   |  |   | 5,162  
|Commercial real estate   |  |                 | 7,477  |                               |   | 6,586           |  |       | 44,838  |  |   | 58,901 
|Land and construction    |  |                 | 4,095  |                               |   |                |  |       | 18,260  |  |   | 22,355 
|Consumer                 |  |                 | 576    |                               |   | 260             |  |       |        |  |   | 836    
|                         |  |                 |        |                               |   |                 |  |       |         |  |   |        
|Total                    |  | $               | 14,777 |                               | $ | 10,233          |  | $     | 118,159 |  | $ | 143,169
|                         |  |                 |        |                               |   |                 |  |       |         |  |   |        

The following table sets forth the maturity or
repricing of loans by interest type at December 31, 2009 (in thousands):



|                       |  |                 |        |                               |   |                 |  |       |         |  |   |        
|---------------------- |  | --------------- | ------ | ----------------------------- | - | --------------- |  | ----- | ------- |  | - | -------
|                       |  | One Yearor Less |        | After OneBut WithinFive Years |   | AfterFive Years |  | Total
|Fixed interest rate    |  | $               | 13,021 |                               | $ | 7,025           |  | $     | 1,166   |  | $ | 21,212 
|Variable interest rate |  |                 | 1,780  |                               |   | 3,208           |  |       | 116,969 |  |   | 121,957
|                       |  |                 |        |                               |   |                 |  |       |         |  |   |        
|Total                  |  | $               | 14,801 |                               | $ | 10,233          |  | $     | 118,135 |  | $ | 143,169
|                       |  |                 |        |                               |   |                 |  |       |         |  |   |        

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

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

We are party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of our
customers. These financial instruments include commitments to extend credit. At December 31, 2009, we had no outstanding commitments to originate real estate loans. These instruments involve, to varying degrees, elements of credit and
interest-rate risk in excess of the amounts recognized in the consolidated balance sheet. The contractual amounts of those instruments reflect the extent of the Companys involvement in particular classes of financial instruments.

Our exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend
credit is represented by the contractual amount of those instruments. We use the same credit policies in making commitments as we do for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed-expiration dates or other termination clauses and may require payment of a fee. Since certain commitments expire without being drawn upon, the total committed amounts do not necessarily represent future
cash requirements. We evaluate each customers credit worthiness on a case-by-case basis. The amount of collateral obtained, if we deem it necessary in order to extend credit, is based on managements credit evaluation of the counterparty.



21



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##### Table of Contents

The following is a summary of the Banks contractual obligations, including certain
on-balance sheet obligations, at December 31, 2009 (in thousands):



|                                |  |                        |         |                |   |          |  |          |        |                 |   |        |  |   |       
|------------------------------- |  | ---------------------- | ------- | -------------- | - | -------- |  | -------- | ------ | --------------- | - | ------ |  | - | ------
|                                |  | Payments Due by Period
|                                |  | Total                  |         | LessThan 1Year |   | 1-3Years |  | 3-5Years |        | MoreThan 5Years
|Contractual Obligations         |  |                        |         |                |   |          |  |          |        |                 |   |        |  |   |       
|Federal Home Loan Bank advances |  | $                      | 57,700  |                | $ | 10,000   |  | $        |       |                 | $ | 27,500 |  | $ | 20,200
|Junior subordinated debenture   |  |                        | 5,155   |                |   |         |  |          |       |                 |   |       |  |   | 5,155 
|Other borrowings                |  |                        | 41,800  |                |   |         |  |          | 28,900 |                 |   | 12,900 |  |   |      
|Operating leases                |  |                        | 425     |                |   | 133      |  |          | 292    |                 |   |       |  |   |      
|                                |  |                        |         |                |   |          |  |          |        |                 |   |        |  |   |       
|Total                           |  | $                      | 105,080 |                | $ | 10,133   |  | $        | 29,192 |                 | $ | 40,400 |  | $ | 25,355
|                                |  |                        |         |                |   |          |  |          |        |                 |   |        |  |   |       

Deposits

Deposits traditionally are the primary source of funds for our use in lending, making investments and meeting liquidity demands. We have
focused on raising time deposits primarily within our market area, which is the tri-county area of Broward, Miami-Dade and Palm Beach counties. However, we offer a variety of deposit products, which we promote within our market area. Net deposits
increased $36.8 million in 2009 and decreased $10.1 million in 2008.

We have used brokered deposits to facilitate mortgage
loan fundings in circumstances when larger than anticipated loan volumes occur and there is limited time to fund the additional loan demand through traditional deposit solicitation. In general, brokered deposits can be obtained in one to three days.
The rates paid on these deposits are typically equal to or slightly less than the high end of the interest rates in our market area. Brokered deposits amounted to $13.9 million and $13.7 million as of December 31, 2009 and December 31,
2008, respectively. Starting in December, 2009, we reduced our reliance on brokered deposits which are considered a more volatile source of funding by no longer accepting or rolling over existing brokered deposits.

The following table displays the distribution of the Banks deposits at December 31, 2009, 2008 and 2007 (dollars in
thousands):



|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|----------------------------------- |  | --------------- | ------- | ------------ | ------ | - | ------ | ---- | ------------ |  | ------ | ------ |  | ------------ | ------- |  | ------ | -
|                                    |  | At December 31, |        
|                                    |  | 2009            |         |              | 2008   |   |        | 2007 |             
|                                    |  | Amount          |         | % ofDeposits |        |   | Amount |      | % ofDeposits |  |        | Amount |  | % ofDeposits |        
|Noninterest-bearing demand deposits |  | $               | 199     |              | .13    | % |        | $    | 90           |  | .08    | %      |  | $            | 1,304   |  | 1.04   | %
|Interest-bearing demand deposits    |  |                 | 1,157   |              | .76    |   |        |      | 1,464        |  | 1.27   |        |  |              | 967     |  | .77    |  
|Money-market deposits               |  |                 | 41,204  |              | 27.16  |   |        |      | 28,009       |  | 24.37  |        |  |              | 26,760  |  | 21.40  |  
|Savings                             |  |                 | 1,861   |              | 1.24   |   |        |      | 1,195        |  | 1.04   |        |  |              | 475     |  | .39    |  
|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|Subtotal                            |  |                 | 44,421  |              | 29.29  |   |        |      | 30,758       |  | 26.76  |        |  |              | 29,506  |  | 23.60  |  
|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|                                    |  |                 |         |              |        |  
|Time deposits:                      |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|0.00%  0.99%                       |  | $               | 8,056   |              | 5.31   | % |        | $    |             |  |       | %      |  | $            |        |  |       | %
|1.00%  1.99%                       |  |                 | 35,524  |              | 23.42  |   |        |      |             |  |       |        |  |              |        |  |       |  
|2.00%  2.99%                       |  |                 | 52,719  |              | 34.76  |   |        |      | 7,696        |  | 6.70   |        |  |              |        |  |       |  
|3.00%  3.99%                       |  |                 | 2,568   |              | 1.69   |   |        |      | 39,678       |  | 34.53  |        |  |              | 11,721  |  | 9.37   |  
|4.00%  4.99%                       |  |                 | 7,562   |              | 4.99   |   |        |      | 35,627       |  | 31.00  |        |  |              | 44,680  |  | 35.73  |  
|5.00%  5.99%                       |  |                 | 810     |              | .53    |   |        |      | 1,146        |  | 1.00   |        |  |              | 37,801  |  | 30.23  |  
|6.00%  6.99%                       |  |                 | 22      |              | .01    |   |        |      | 20           |  | .01    |        |  |              | 1,326   |  | 1.07   |  
|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|Total time deposits (1)             |  |                 | 107,261 |              | 70.71  |   |        |      | 84,167       |  | 73.24  |        |  |              | 95,528  |  | 76.40  |  
|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  
|Total deposits                      |  | $               | 151,682 |              | 100.00 | % |        | $    | 114,925      |  | 100.00 | %      |  | $            | 125,034 |  | 100.00 | %
|                                    |  |                 |         |              |        |   |        |      |              |  |        |        |  |              |         |  |        |  



|(1) | Included are Individual Retirement Accounts (IRAs) totaling $8,790,000 and $6,618,000 at December 31, 2009 and 2008, respectively, all of which are in the
form of time deposits.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Deposits of $100,000 or more, or Jumbo Time Deposits, are generally considered a more
unpredictable source of funds. The following table sets forth our maturity distribution of deposits of $100,000 or more at December 31, 2009 and 2008 (in thousands):



|                                         |  |                 |        |      |   |       
|---------------------------------------- |  | --------------- | ------ | ---- | - | ------
|                                         |  | At December 31,
|                                         |  | 2009            |        | 2008
|Due three months or less                 |  | $               | 9,060  |      | $ | 5,980 
|Due more than three months to six months |  |                 | 14,083 |      |   | 6,225 
|More than six months to one year         |  |                 | 25,608 |      |   | 21,551
|One to five years                        |  |                 | 3,887  |      |   | 3,103 
|                                         |  |                 |        |      |   |       
|Total                                    |  | $               | 52,638 |      | $ | 36,859
|                                         |  |                 |        |      |   |       



23



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##### Table of Contents

ANALYSIS OF RESULTS OF OPERATIONS

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

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



|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|-------------------------------------------------------------------------------- |  | ------------------------ | ------- | -------------------- | ---- | ----------------- |  | ---- | -------------- |  | -------------------- | ------- | ----------------- | - | ------ | -------------- | ---- | -------------------- |  | ----------------- | ------- |  | - | ------ |  | ---- | -
|                                                                                 |  | Years Ended December 31, |        
|                                                                                 |  | 2009                     |         |                      | 2008 |                   |  | 2007 |               
|                                                                                 |  | AverageBalance           |         | InterestandDividends |      | AverageYield/Rate |  |      | AverageBalance |  | InterestandDividends |         | AverageYield/Rate |   |        | AverageBalance |      | InterestandDividends |  | AverageYield/Rate |        
|Interest-earning assets:                                                         |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Loans                                                                            |  | $                        | 158,157 |                      | $    | 8,986             |  | 5.68 | %              |  | $                    | 162,157 |                   | $ | 11,236 |                | 6.93 | %                    |  | $                 | 176,679 |  | $ | 13,086 |  | 7.41 | %
|Securities                                                                       |  |                          | 89,129  |                      |      | 4,985             |  | 5.59 |                |  |                      | 76,975  |                   |   | 4,183  |                | 5.43 |                      |  |                   | 50,891  |  |   | 2,803  |  | 5.51 |  
|Other interest-earning assets (1)                                                |  |                          | 16,953  |                      |      | 35                |  | 0.21 |                |  |                      | 4,786   |                   |   | 151    |                | 3.16 |                      |  |                   | 4,364   |  |   | 248    |  | 5.68 |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Total interest-earning assets/interest income                                    |  |                          | 264,239 |                      |      | 14,006            |  | 5.30 |                |  |                      | 243,918 |                   |   | 15,570 |                | 6.38 |                      |  |                   | 231,934 |  |   | 16,137 |  | 6.96 |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Cash and due from banks                                                          |  |                          | 2,176   |                      |      |                   |  |      |                |  |                      | 538     |                   |   |        |                |      |                      |  |                   | 346     |  |   |        |  |      |  
|Premises and equipment                                                           |  |                          | 3,017   |                      |      |                   |  |      |                |  |                      | 3,181   |                   |   |        |                |      |                      |  |                   | 3,433   |  |   |        |  |      |  
|Other assets                                                                     |  |                          | 1,933   |                      |      |                   |  |      |                |  |                      | 3,234   |                   |   |        |                |      |                      |  |                   | 2,609   |  |   |        |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Total assets                                                                     |  | $                        | 271,365 |                      |      |                   |  |      |                |  | $                    | 250,871 |                   |   |        |                |      |                      |  | $                 | 238,322 |  |   |        |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |               
|Interest-bearing liabilities:                                                    |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Savings, NOW and money-market deposits                                           |  |                          | 38,616  |                      |      | 713               |  | 1.85 |                |  |                      | 32,291  |                   |   | 1,024  |                | 3.17 |                      |  |                   | 26,648  |  |   | 1,196  |  | 4.49 |  
|Time deposits                                                                    |  |                          | 94,838  |                      |      | 2,913             |  | 3.07 |                |  |                      | 81,461  |                   |   | 3,497  |                | 4.29 |                      |  |                   | 97,269  |  |   | 4,640  |  | 4.77 |  
|Borrowings (4)                                                                   |  |                          | 113,175 |                      |      | 4,725             |  | 4.17 |                |  |                      | 109,961 |                   |   | 4,690  |                | 4.27 |                      |  |                   | 86,089  |  |   | 3,864  |  | 4.49 |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Total interest-bearing liabilities/interest expense                              |  |                          | 246,629 |                      |      | 8,351             |  | 3.39 |                |  |                      | 223,713 |                   |   | 9,211  |                | 4.12 |                      |  |                   | 210,006 |  |   | 9,700  |  | 4.62 |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Noninterest-bearing demand deposits                                              |  |                          | 449     |                      |      |                   |  |      |                |  |                      | 715     |                   |   |        |                |      |                      |  |                   | 1,684   |  |   |        |  |      |  
|Other liabilities                                                                |  |                          | 3,620   |                      |      |                   |  |      |                |  |                      | 3,478   |                   |   |        |                |      |                      |  |                   | 5,289   |  |   |        |  |      |  
|Stockholders equity                                                             |  |                          | 20,667  |                      |      |                   |  |      |                |  |                      | 22,965  |                   |   |        |                |      |                      |  |                   | 21,343  |  |   |        |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Total liabilities and stockholders equity                                       |  | $                        | 271,365 |                      |      |                   |  |      |                |  | $                    | 250,871 |                   |   |        |                |      |                      |  | $                 | 238,322 |  |   |        |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Net interest income                                                              |  |                          |         |                      | $    | 5,655             |  |      |                |  |                      |         |                   | $ | 6,359  |                |      |                      |  |                   |         |  | $ | 6,437  |  |      |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Interest rate spread (2)                                                         |  |                          |         |                      |      |                   |  | 1.91 | %              |  |                      |         |                   |   |        |                | 2.26 | %                    |  |                   |         |  |   |        |  | 2.34 | %
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Net interest margin (3)                                                          |  |                          |         |                      |      |                   |  | 2.14 | %              |  |                      |         |                   |   |        |                | 2.61 | %                    |  |                   |         |  |   |        |  | 2.78 | %
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  
|Ratio of average interest-earning assets to average interest-bearing liabilities |  |                          |         |                      |      |                   |  | 1.07 |                |  |                      |         |                   |   |        |                | 1.09 |                      |  |                   |         |  |   |        |  | 1.10 |  
|                                                                                 |  |                          |         |                      |      |                   |  |      |                |  |                      |         |                   |   |        |                |      |                      |  |                   |         |  |   |        |  |      |  



|(1) | Includes interest-earning deposits with banks, Federal funds sold and Federal Home Loan Bank stock dividends.
|--- | -------------------------------------------------------------------------------------------------------------

|(2) | Interest rate spread represents the difference between average yield on interest-earning assets and the average cost of interest-bearing liabilities.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Net interest margin is net interest income divided by average interest-earning assets.
|--- | --------------------------------------------------------------------------------------

|(4) | Includes Federal Home Loan Bank advances, junior subordinated debenture and securities sold under an agreement to repurchase.
|--- | -----------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

RATE/VOLUME ANALYSIS

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



|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|---------------------------------- |  | ------------------------------------------------------------------------------ | ------ | - | ------ | - | ------ | ----------- |  | - | ----- | - |  | - | ------ | -
|                                   |  | Year Ended December 31,2009 versus 2008Increases (Decreases) Due to Change
In: |       
|                                   |  | Rate                                                                           |        |   | Volume |   |        | Rate/Volume |  |   | Total |  
|Interest-earning assets:           |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Loans                              |  | $                                                                              | (2,023 | ) |        | $ | (277   | )           |  | $ | 50    |   |  | $ | (2,250 | )
|Securities                         |  |                                                                                | 123    |   |        |   | 660    |             |  |   | 19    |   |  |   | 802    |  
|Other interest-earning assets      |  |                                                                                | (140   | ) |        |   | 383    |             |  |   | (359  | ) |  |   | (116   | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Total interest-earning assets      |  |                                                                                | (2,040 | ) |        |   | 766    |             |  |   | (290  | ) |  |   | (1,564 | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|                                   |  |                                                                                |        |  
|Interest-bearing liabilities:      |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Savings, NOW and money-market      |  |                                                                                | (428   | ) |        |   | 201    |             |  |   | (84   | ) |  |   | (311   | )
|Time deposits                      |  |                                                                                | (995   | ) |        |   | 574    |             |  |   | (163  | ) |  |   | (584   | )
|Other                              |  |                                                                                | (99    | ) |        |   | 136    |             |  |   | (2    | ) |  |   | 35     |  
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Total interest-bearing liabilities |  |                                                                                | (1,522 | ) |        |   | 911    |             |  |   | (249  | ) |  |   | (860   | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Net interest income                |  | $                                                                              | (518   | ) |        | $ | (145   | )           |  | $ | (41   | ) |  | $ | (704   | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|                                   | 
|                                   |  | Year Ended December 31,2008 versus 2007Increases (Decreases) Due to Change In: |       
|                                   |  | Rate                                                                           |        |   | Volume |   |        | Rate/Volume |  |   | Total |  
|Interest-earning assets:           |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Loans                              |  | $                                                                              | (844   | ) |        | $ | (1,076 | )           |  | $ | 70    |   |  | $ | (1,850 | )
|Securities                         |  |                                                                                | (37    | ) |        |   | 1,437  |             |  |   | (20   | ) |  |   | 1,380  |  
|Other interest-earning assets      |  |                                                                                | (111   | ) |        |   | 23     |             |  |   | (9    | ) |  |   | (97    | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Total interest-earning assets      |  |                                                                                | (992   | ) |        |   | 384    |             |  |   | 41    |   |  |   | (567   | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|                                   |  |                                                                                |        |  
|Interest-bearing liabilities:      |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Savings, NOW and money-market      |  |                                                                                | (351   | ) |        |   | 253    |             |  |   | (74   | ) |  |   | (172   | )
|Time deposits                      |  |                                                                                | (464   | ) |        |   | (754   | )           |  |   | 75    |   |  |   | (1,143 | )
|Other                              |  |                                                                                | (192   | ) |        |   | 1,070  |             |  |   | (52   | ) |  |   | 826    |  
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Total interest-bearing liabilities |  |                                                                                | (1,007 | ) |        |   | 569    |             |  |   | (51   | ) |  |   | (489   | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  
|Net interest income                |  | $                                                                              | 15     |   |        | $ | (185   | )           |  | $ | 92    |   |  | $ | (78    | )
|                                   |  |                                                                                |        |   |        |   |        |             |  |   |       |   |  |   |        |  



25



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##### Table of Contents

Year Ended December 31, 2009 Compared to Year Ended December 31, 2008

General. Net loss for 2009 was $(11,481,000), or $(3.50) per basic and diluted share, $12 million less than net earnings in 2008. The
primary factors explaining the decline were a $14.4 million increase in the provision for loan losses, coupled with a $.5 million decrease in noninterest income (expense) and a $.7 million decrease in net interest income, partially offset by a $4.3
million decrease in income tax expense, all of which were reflections of the continued deterioration of the real estate market in Florida specifically and the overall economy in general. These and other factors contributing to our 2009 net loss are
discussed below.

Interest Income. Interest income decreased to $14.0 million for 2009 compared to $15.6 million for 2008.
Interest income on loans decreased to $2.3 million due primarily to a decrease in the average loan portfolio balance and a decrease in the average yield earned in 2009. Interest on securities increased by $.8 million due primarily to an increase in
the average balance of the securities portfolio in 2009.

Interest Expense.Interest expense on deposit accounts decreased to
$3.6 million for 2009, from $4.5 million for 2008. Interest expense on deposits decreased primarily because of a decrease in rates paid in 2009. Interest expense on borrowings remained at $4.7 million for 2009 and 2008.

Provision for Loan Losses. The provision for 2009 increased $14.4 million to $15.8 million during 2009 compared to $1.4 million for 2008.
In 2009, the provision was primarily to reflect the impairment in value of specific loans in the amount of $5.5 million and charge-offs of uncollectible balances of $8.3 million. Our policy is to maintain the allowance for loan losses at a level
sufficient to absorb probable incurred losses inherent in the loan portfolio. The allowance is increased by the provision for loan losses, which is a charge to current period earnings, and is decreased by charge-offs, net of recoveries on prior loan
charge-offs. Managements periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrowers ability to repay,
estimated value of the underlying collateral, loans identified as impaired, current economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. As these
factors change, the level of loan loss provision changes. The allowance for loan losses is also discussed as part of Loan Portfolio, Asset Quality and Allowance for Loan Losses.

Noninterest Income (Expense). Total noninterest income (expense) decreased to $(145,000) for 2009, from $393,000 for 2008 primarily as a
result of a decrease in loan prepayment fees, late charge fees and an other-than-temporary impairment on securities of $179,000 in 2009.

Noninterest Expenses. Total noninterest expenses increased to $4.7 million for 2009 from $4.5 million for 2008, primarily due to a special
assessment by the Federal Deposit Insurance Corporation of $119,000 in 2009.

Income Taxes (Benefit). Income tax benefit for
2009, was $(3,501,000) (an effective rate of 23.4%) compared to income taxes of $313,000 (an effective rate of 37.6%) for 2008.

Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007

General. Net earnings for 2008 were $520,000,
or $.17 per basic and $.16 per diluted share, $1.2 million less than in 2007. The primary factors explaining the decline were a $796,000 increase in noninterest expenses coupled with an $898,000 increase in the provision for loan losses, and a
$78,000 decrease in net interest income, partially offset by a $690,000 decrease in income tax expense.

Interest Income.
Interest income decreased to $15.6 million for 2008 compared to $16.1 million for 2007. Interest income on loans decreased to $11.2 million due primarily to a decrease in the average loan portfolio balance and a decrease in the average yield earned
in 2008. Interest on securities increased by $1.4 million due primarily to an increase in the average balance of the securities portfolio in 2008.

Interest Expense.Interest expense on deposit accounts decreased to $4.5 million for 2008, from $5.8 million for 2007. Interest expense on
deposits decreased primarily because of a decrease in the average balance of deposits and rates paid in 2008. Interest expense on borrowings increased to $4.7 million for 2008 from $3.9 million for 2007 due primarily to an increase in the average
balance of borrowings.



26



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##### Table of Contents

Provision for Loan Losses. The provision for 2008 increased $.9 million to $1.4 million for
2009 compared to $.5 million for 2007. In 2008, the provision was primarily to reflect the impairment in value of ten loans in the amount of $1.1 million. Our policy is to maintain the allowance for loan losses at a level sufficient to absorb
probable incurred losses inherent in the loan portfolio. The allowance is increased by the provision for loan losses, which is a charge to current period earnings, and is decreased by charge-offs, net of recoveries on prior loan charge-offs.
Managements periodic evaluation of the adequacy of the allowance is based upon historical experience, the volume and type of lending conducted by us, adverse situations that may affect the borrowers ability to repay, estimated value of
the underlying collateral, loans identified as impaired, current economic conditions, particularly as they relate to our market areas, and other factors related to the estimated collectability of our loan portfolio. As these factors change, the
level of loan loss provision changes. The allowance for loan losses is also discussed as part of Loan Portfolio, Asset Quality and Allowance for Loan Losses.

Noninterest Income. Total noninterest income decreased to $393,000 for 2008, from $533,000 for 2007 primarily as a result of a litigation
settlement of $155,000 in 2007 and a decrease in loan prepayment fees.

Noninterest Expenses. Total noninterest expenses
increased to $4.5 million for 2008 from $3.7 million for 2007, primarily due to losses relating to foreclosed assets.

Income
Taxes. Income taxes for 2008, were $313,000 (an effective rate of 37.6%) compared to income taxes of $1,003,000 (an effective rate of 36.5%) for 2007.

Impact of Inflation and Changing Prices

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

Selected Quarterly Results

Selected quarterly results of operations for the four quarters ended December 31, 2009 and 2008 are as follows (in thousands, except
share amounts):



|                                                    |  |               |         |      |              |   |       |               |  |   |              |   |               |   |       |              |   |               |   |  |              |       |  |   |       |   |  |   |      
|--------------------------------------------------- |  | ------------- | ------- | ---- | ------------ | - | ----- | ------------- |  | - | ------------ | - | ------------- | - | ----- | ------------ | - | ------------- | - |  | ------------ | ----- |  | - | ----- | - |  | - | -----
|                                                    |  | 2009          |         | 2008
|                                                    |  | FourthQuarter |         |      | ThirdQuarter |   |       | SecondQuarter |  |   | FirstQuarter |   | FourthQuarter |   |       | ThirdQuarter |   | SecondQuarter |   |  | FirstQuarter
|Interest income                                     |  | $             | 2,806   |      |              | $ | 3,548 |               |  | $ | 3,985        |   |               | $ | 3,667 |              | $ | 3,665         |   |  | $            | 3,900 |  | $ | 3,980 |   |  | $ | 4,025
|Interest expense                                    |  |               | 1,868   |      |              |   | 2,076 |               |  |   | 2,217        |   |               |   | 2,190 |              |   | 2,260         |   |  |              | 2,283 |  |   | 2,319 |   |  |   | 2,349
|                                                    |  |               |         |      |              |   |       |               |  |   |              |   |               |   |       |              |   |               |   |  |              |       |  |   |       |   |  |   |      
|Net interest income                                 |  |               | 938     |      |              |   | 1,472 |               |  |   | 1,768        |   |               |   | 1,477 |              |   | 1,405         |   |  |              | 1,617 |  |   | 1,661 |   |  |   | 1,676
|Provision (credit) for loan losses                  |  |               | 10,554  |      |              |   | 733   |               |  |   | 4,102        |   |               |   | 405   |              |   | 1,213         |   |  |              | 47    |  |   | (7    | ) |  |   | 121  
|                                                    |  |               |         |      |              |   |       |               |  |   |              |   |               |   |       |              |   |               |   |  |              |       |  |   |       |   |  |   |      
|Net interest income after provision for loan losses |  |               | (9,616  | )    |              |   | 739   |               |  |   | (2,334       | ) |               |   | 1,072 |              |   | 192           |   |  |              | 1,570 |  |   | 1,668 |   |  |   | 1,555
|Noninterest income                                  |  |               | 12      |      |              |   | (165  | )             |  |   | (23          | ) |               |   | 31    |              |   | 235           |   |  |              | 78    |  |   | 38    |   |  |   | 42   
|Noninterest expense                                 |  |               | 1,490   |      |              |   | 1,077 |               |  |   | 1,121        |   |               |   | 1,010 |              |   | 1,228         |   |  |              | 1,325 |  |   | 1,083 |   |  |   | 909  
|                                                    |  |               |         |      |              |   |       |               |  |   |              |   |               |   |       |              |   |               |   |  |              |       |  |   |       |   |  |   |      
|(Loss) earnings before income taxes                 |  |               | (11,094 | )    |              |   | (503  | )             |  |   | (3,478       | ) |               |   | 93    |              |   | (801          | ) |  |              | 323   |  |   | 623   |   |  |   | 688  
|Net (loss) earnings                                 |  |               | (9,056  | )    |              |   | (313  | )             |  |   | (2,170       | ) |               |   | 58    |              |   | (498          | ) |  |              | 201   |  |   | 388   |   |  |   | 429  
|Basic (loss) earnings per common share              |  |               | (2.76   | )    |              |   | (.10  | )             |  |   | (.66         | ) |               |   | .02   |              |   | (.16          | ) |  |              | .06   |  |   | .12   |   |  |   | .13  
|Diluted (loss) earnings per common share            |  |               | (2.76   | )    |              |   | (.10  | )             |  |   | (.66         | ) |               |   | .02   |              |   | (.16          | ) |  |              | .06   |  |   | .12   |   |  |   | .13  



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

The
financial statements of OptimumBank Holding, Inc. as of and for the years ended December 31, 2009 and 2008 are set forth in this Form 10-KSB as Exhibit 13.1 and contain the following information:

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets, December 31, 2009 and 2008

Consolidated Statements of Earnings for the Years Ended December 31, 2009 and 2008

Consolidated Statements of Stockholders Equity for the Years Ended December 31, 2009 and 2008

Consolidated Statements of Cash Flows for the Years Ended December 31, 2009 and 2008

Notes to Consolidated Financial Statements, December 31, 2009 and 2008 and for the Years Then Ended



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

Not applicable.



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

(a)
Evaluation of Disclosure Controls and Procedures

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

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

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined
in Exchange Act Rule 13a-15(f). Such internal controls over financial reporting were designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles.

The Companys management assessed the effectiveness of the
Companys internal control over financial reporting as of December 31, 2009. In making this assessment, the Company used the criteria set forth in Internal Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based upon our evaluation under the framework in Internal Control-Integrated Framework, our management concluded that our internal control over financial reporting was effective as of
December 31, 2009.

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

(c) Changes in Internal Controls

On November 23, 2009, the Company restated its interim financial statements for the three and six months ended
June 30, 2009. In the restatement, management increased the level of impaired loans and reported substantial additional provisions for loan losses and charge offs related to impaired real estate loans for the three months ended June 30,
2009. Management made the adjustments to the Companys financial statements based on, among other things, managements review of additional information regarding the Companys real estate loan portfolio, reevaluation of the underlying
collateral and identification of continued deterioration in the ability of some of the borrowers to make loan payments.



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As a result of the restatement, management reevaluated the effectiveness of the
Companys disclosure controls and procedures and internal control over financial reporting as of June 30, 2009, including the identification of any material weaknesses in the Companys internal controls. Management concluded that the
Companys internal controls contained material weaknesses as of June 30, 2009, with respect to the proper identification and accounting for impaired loans, in particular, troubled debt restructurings.

In the last quarter of 2009, management instituted changes to the Companys internal financial accounting controls to address the
material weaknesses that existed as of June 30, 2009 with respect to the proper identification and accounting for impaired loans, in particular, troubled debt restructurings. These changes included the formation of a loan workout committee,
consisting of executive management, a non-management director, and servicing, credit administration and loan officers. The committee meets at least monthly to identify, evaluate and report on delinquent, restructured and impaired loans and
foreclosed real estate. There have been no other changes in the Companys internal control over financial reporting that have materially affected or are reasonably likely to materially affect the Companys internal control over financial
reporting.

(d) Limitations on the Effectiveness of Controls

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

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



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

The
Company did not fail to file any Form 8-K or to disclose any information required to be disclosed therein during the fourth quarter of 2009.

PART III



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

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

The information contained under the sections captioned Nominees and Executive Officers Who Are Not
Directors under Proposal 1: Election of Directors and Management Information and The Board of Directors Meetings and Committees under Corporate Governance, and Section 16(a) Beneficial Ownership
Reporting Compliance, in the registrants definitive Proxy Statement for the Annual Meeting of Shareholders to be held on  June 3, 2009, at 10:00
a.m. to be filed with the SEC pursuant to Regulation 14A within 120 days of the registrants fiscal year end (the Proxy Statement), is incorporated herein by reference.



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

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



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

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

We had one compensation plan under
which shares of our common stock were issuable at December 31, 2009. This plan is our Stock Option Plan and was previously approved by our stockholders. The following table sets forth information as of December 31, 2008 with respect to the
number of shares of our common stock issuable pursuant to the Stock Option Plan:

EQUITY COMPENSATION PLAN INFORMATION



|                                                       |  |                                                                                          |  |                                                                        |      |                                                                                                                                       |        
|------------------------------------------------------ |  | ---------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------- | -------
|                                                       |  | (a)                                                                                      |  | (b)                                                                    |      | (c)                                                                                                                                  
|Plan Category                                          |  | Number of Securitiesto 
be Issued Upon Exerciseof Outstanding OptionsWarrants and Rights |  | Weighted-AverageExercise Price ofOutstandingOptions,Warrants
AndRights |      | Number of SecuritiesRemaining 
Available forFuture Issuance underEquity CompensationPlans (excludingSecurities
Reflectedin Column (a)
|Equity compensation plans approved by security holders |  | 419,956                                                                                  |  | $                                                                      | 7.13 |                                                                                                                                       | 123,739
|                                                       |  |                                                                                          | 
|Total                                                  |  | 419,956                                                                                  |  | $                                                                      | 7.13 |                                                                                                                                       | 123,739
|                                                       |  |                                                                                          |  |                                                                        |      |                                                                                                                                       |        



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

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



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

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

The following exhibits are filed with or incorporated by reference
into this report. The exhibits denominated by (i) an asterisk (*) were previously filed as a part of a Registration Statement on Form 10-SB under the Exchange Act, filed with the Federal Deposit Insurance Corporation on March 28,
2003; (ii) a double asterisk (**)were previously filed as part of a current report on Form 8-K filed with the Securities and Exchange Commission (SEC) on May 11, 2004; and (iii) a triple asterisk (***)were previously filed
as part of a Quarterly Report on Form 10-QSB filed with the SEC on August 12, 2004; (iv) a quadruple asterisk (****) were previously filed as part of an Annual Report on Form 10-KSB filed with the SEC on March 31, 2006; (v) a
quintuple asterisk (*****) were previously filed as part of an Annual Report on Form 10-KSB filed with the SEC on March 31, 2008; and (vi) a sextuple asterisk (******) were previously filed as part of an Annual Report on Form 10-K filed
with the SEC on March 31, 2009.



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3. Exhibits



|       |  |      |     |  |                                                                                                                                 
|------ |  | ---- | --- |  | --------------------------------------------------------------------------------------------------------------------------------
|**     |  | 3.1  |     |  | Articles of Incorporation                                                                                                       
|****** |  | 3.2  |     |  | Articles of Amendment to Articles of Incorporation                                                                              
|***    |  | 3.3  |     |  | Bylaws                                                                                                                          
|****   |  | 4.1  |     |  | Form of stock certificate                                                                                                       
|*****  |  | 10.1 | (a) |  | Amended and Restated Stock Option Plan                                                                                          
|*      |  | 10.3 | (a) |  | Agreement between OptimumBank, Albert J. Finch and Richard L. Browdy dated June 14, 2002                                        
|       |  | 13.1 |     |  | Consolidated Financial Statements of OptimumBank Holdings, Inc. and Report of Independent Registered Public Accounting Firm     
|*****  |  | 14.1 |     |  | Code of Ethics for Chief Executive Officer and Senior Financial Officers                                                        
|       |  | 21.1 |     |  | Subsidiaries of the Registrant                                                                                                  
|       |  | 31.1 |     |  | Certification of Principal Executive and Principal Financial Officer required by Rule 13a-14(a)/15d-14(a) under the Exchange Act
|       |  | 32.1 |     |  | Certification of Principal Executive and Principal Financial Officer under §906 of the Sarbanes-Oxley Act of 2002               



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



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

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



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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be duly signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Fort Lauderdale, State of Florida, on the
15thday of April 2010.



OPTIMUMBANK HOLDINGS, INC./s/ Richard L. BrowdyRichard L. BrowdyPresident and Chief Financial Officer(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)


In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities
indicated on April 15, 2010.



|                      |  |                                   
|--------------------- |  | ----------------------------------
|Signature             |  | Title                             
|                      | 
|/s/ Richard L. Browdy |  | Director                          
|Richard L. Browdy     |  |                                   
|                      | 
|/s/ Sam Borek         |  | Director and Chairman of the Board
|Sam Borek             |  |                                   
|                      | 
|/s/ H. David Krinsky  |  | Director                          
|H. David Krinsky      |  |                                   
|                      | 
|/s/ Wendy Mitchler    |  | Director                          
|Wendy Mitchler        |  |                                   
|                      | 
|                      |  | Director                          
|Larry Willis          |  |                                   



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Exhibit Index



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